I will wait until I know for sure that this is just replacing the silly paper that we get today before I make up my mind about this.
“Rather than relying on paper-based procedures, this system will leverage 21st century electronic means to obtain basic information about who is traveling to the U.S. without a visa,” said People's Commissar Michael Chertoff.
This would indicate it's just a replacement for the paper.
This too:
Until ESTA is mandatory for all VWP travelers, however, ESTA applicants will also still need to complete an I-94W form en-route, for presentation at a U.S. port of entry.