I agree that physical books for fluent readers are becoming passe. For struggling readers, however, you need a "knowing other" sitting right beside you. The tutor can do all the modeling: 1 to 1 matching, moving left to right across page, return sweep, framing out word chunks, etc.
This would certainly work okay with one child sitting at a computer. But,a lot of children do not have computers at home, so they are limited to only viewing it in the classroom setting.
When teachers do reading they usually divide the students into groups. Each child, and the teacher, has a copy of the book. This would be difficult to do on a computer.
In addition, personalized books may be presented as gifts, put in the classroom library, etc.
Other things to consider as well, screens have glare, a lot of school computers cannot be easily positioned for individual eye sight. Most importantly, in my mind though, is the portability, hands on feature, and easy access.
Regarding cookupbooks specifically, you already can read the entire book online, just click the magnifying glass associated with a particular book. And as mentioned, we're working hard to improve the user interface!