Mswoods1 has the key point, most people can't afford a true home theater. Unless you have several hundred thousand dollars to build one that truly mimics a multiplex the experience just isn't the same.
Digital cinema, as Lee said, is on the way and should do a lot to improve the picture quality plus giving theater owners a whole new level of versatility in programming.
One recent experience I thought was pretty amazing was the Disney animated film "Meet the Robinsons" with a 3D version shown only in theaters with digital projection systems. (2 screens in Seattle) Instead of the old cardboard glasses we were given fairly heavy plastic ones (more like sunglasses). The film had incredible depth of field and sharpness, none of the old "fuzzy" images that gave you a major headache. The screens that showed the 3D version earned three times that of the standard release. I would love to see more features in the format.
In short I think it will be decades before "going to the movies" fades away.