Jeremy Zawodny from Yahoo asks "when will blogging peak?" When will blogs become "just another part of daily life for a bunch of people"?
When I think of something peaking, I think of it dying off completely on the other end. That's not going to happen with blogs. What I do think will happen is that fringe, low-traffic blogs will die out. The evolution of blogging is like pottery — you throw some clay on the wheel, probably a bit too much, but then you strip the excess and fashion a pot out of it. You may waste some clay in the process, but the pot you have to show for it will last forever.
Everyone likes to jump onto what they see as The Next Big Thing and that's where you'll get the huge spike in blogs we are experiencing now. Once those low-traffic bloggers see that their blogs have very few readers, for whatever reason (poor exposure, lack of postings, lack of compelling content, etc.), they'll quit blogging and go back to doing whatever they were doing before blogs existed. The only guys left blogging will be those A/B/C-list bloggers that do produce compelling content and do generate enough traffic to warrant the effort involved and those "fringe" bloggers that are too stubborn to quit. After all the dust has cleared, we'll have the 500 lb gorilla blogs and "mom & pop" blogs with smaller, but loyal followings amid a vast wasteland of rotting micro-blogs akin to the wasteland of mid-90s websites that featured scrolling marquees and yellow text on a background of stars built with Geocities' page builder.
The key to surviving is having a strong community built around blogs. I feel that online journals, like those on livejournal.com, will survive. The name says it all: these are journals, records of daily life, except that are shared with the world (or a select group of friends) instead of kept hidden under a pillow. They rely on a close group of friends to function. The "friends" list on these types of sites is easily accesible and commenting between friends is sometimes used as a substitute to IM. The difference being that journals (like blogs) are one-to-many instead of one-to-one. Another key difference is that these journals are for the most part uniform and there is authentication is site-wide, so members don't have to register each time they want to comment on a post and it is easy to hide posts from readers that don't have the proper authentication. Stand-alone blogging software just doesn't have this sort of integration.
To continue with Jeremy's online shopping metaphor, right now we have all these .com-types popping up everywhere thanks to the low cost of entry (only we replace VC funding with free and easy blogging software). After the peak and "crash", all that will be left are the big guys (Amazon.com, Buy.com, et al), the "mom & pop"-sized guys (i.e., Deep Discount DVD, NewEgg [to some extent], et al) and the niche, hosted players (eBay Stores, Amazon Marketplace).
This time, the winners and losers will be determined by the content producers and consumers, not by faceless investors and people trying to make a quick buck; this time, we're trading in trackbacks, not greenbacks.