I suspect that the vacuum left behind by dead local newspapers will be filled by local blogs. I haven't researched this but I wonder if the markets that lost their local paper if blogs have made up the loss. Knoxville, TN has to really nice local blogs even though we have both an alternative weekly (Metropulse) and a paper.
If you do research it, I'd appreciate it if you'd write up a guide to finding good local blogs and submit it to HN. I don't know of any in my area, and aside from googling my city name, I can't think of many ways to find them.
* http://knoxify.com/ * http://www.notawigshop.com/