The recruiting industry will not go away, but sites like CareerBuilder and Monster as major players within the recruiting industry will. The value of matching job seekers to jobs is far more efficient within LinkedIn.
Competing with CareerBuilder and Monster is a waste of time. Both of these sites will eventually become irrelevant -- searching for a job by typing in a few keywords is unnatural. People hear about jobs thru friends, professional acquaintances, work product (GitHub, StackOverflow, etc), and local businesses (signs) and as LinkedIn becomes more prevalent they will grab more then their fair share of this market without trying very hard.
The far bigger opportunity for LinkedIn is to aggregate business leads. Are you looking to outfit your company with new laptops this year, looking for a block of hotel rooms for a conference, looking for an event management company, looking to upgrade accounting systems. Each of these leads is worth hundreds of dollars and helping businesses find good vendors is not easy (consultants make billions of dollars/yr making vendor recommendations).
Spent 1.5 years as lead Product for Yahoo HotJobs and this post is spot-on -- nicely captured. To put it rather bluntly there is more innovation happening in most small sized municipal utilities (see the Palo Alto Green program) then in the online job recruitment space. Given how incredibly important talent is to companies the CEO needs to reset incentive structures for their HR organizations.