I honestly don't know why I should care much about whether or not this has an effect on (F)LGSs's. In my mind, the center of the gaming universe has moved far away from them already. Honestly, the effect of a cheap PDF compared to the effect of online sales in general (either at Amazon or Paizo's own site) is likely minimal at best.
As far as I'm concerned, getting a complete rulebook in PDF form for $10 is awesome. I won't buy it* - but others will, and it's a good marketing strategy. It's expensive enough to give perceived value to it (something you don't necessarily get with a free product), but cheap enough that it's easily approachable.
I also think it's a good alternative for players. I'm a fan of the split DM and Player Books model of RPGs, since I don't want my players to spend their cash on stuff only I need. But this is a low-price alternative to a full book, so they can just print the important sections they need.
I'm not exactly Paizo's biggest cheerleader, and I haven't been their customer for a few years now, but this is purely good news for their customers and savvy business sense, as far as I'm concerned. (Then again, I think the DDI is great news and savvy business sense, too, and for similar reasons - so depending on your own opinions, my perspective could be totally meaningless!)
-O
* There's a strong chance I won't buy Pathfinder at all, but if I do, it will be in book form like I've been doing for 25+ years. I don't like screen reading for anything longer than an article. It's still steep for a game I likely won't play and already own most of the rules for, but I've spent more on other games I've never played!