The USB Promoter Group clarified its stance on IEEE1394 (aka FireWire and iLink): USB 2.0 will become the be all and end all of PC connectivity and 1394 will continue to exist in the consumer electronics space, connecting digital VCRs to digital TVs and the like. In the USBPG worldview, the only PCs that require 1394 will be those that need to connect to such devices -- all other high bandwidth devices, such as fast hard drives, will clearly be hooked up via USB 2.0.
As the Technical Introduction to USB 2.0 puts it, even "high bandwidth interfaces such as SCSI adapters may no longer be required". So where we once had 1394 replacing SCSI while USB replaced the old serial and parallel ports, we now have USB 2.0 replacing everything.
USB 2.0 is unlikely to supersede 1394, though, since it retains the need for a hub -- unlike 1394, there's no peer-to-peer operation; data can only from device to device via the hub. In fact, hubs will take on a greater role with USB 2.0 since they will have to arbitrate data traffic flowing at 480Mbps and the original 12MBps and 1.5Mbp