I think the market will be split, but the split will be temporary.
Right now I have a huge backlog of 3.5 stuff to run. I have Ptolus, multiple Paizo adventure paths, Red Hand of Doom, and a bunch of Necromancer Games adventures that I haven't gotten to run yet. I've got WoTC books that I haven't even had the chance to properly read. I could run a whole campaign off the stuff in Libris Mortis, for example. The stuff that got released late in the 3.5 cycle was of pretty high quality -- probably better than the first 4E stuff will be, because the authors need time to get familiar with how to write good 4E adventures.
So, while I may eventually switch to 4E, it will be awhile. Hopefully, I'll manage to delay the switch until the game's been played for a couple of years and the broken stuff has been caught and revised. I wouldn't mind missing the first revision of splatbooks -- it would be nice to skip the 4E Tome and Blood and move right on to the 4E Complete Mage. And if I could pick up the game when they release 4.5 (and they will), that will be perfect.
I expect that during this time I'll try to get in a game and be a 4E player. But I won't need to buy anything but the 4E players handbook for this.
Honestly, I doubt very much that I am alone in this. People like me may be WoTC's biggest problem.
Ken