The first question when looking at "what type of film camera should I get?" is the question of what it will be used for and by who. The question of digital vs film
will likely go somewhere else.
When I was a young lad, my first camera was a 110. I could point it in some direction, and take a reasonable picture. A few years later I got a 35mm point and shoot. Nothing special on it either, just a durable, reloadable, almost disposable camera.
Today, when I want to take a picture its more than grabbing a memory but some artistic value too. Photographing fireworks, night photography, water at different shutter speeds, different depth of field with nature photography, sunsets and such. Point and shoot cameras can not handle this variety of photographic styles; and to an extent APS cameras are designed as point and shoot with a few more bells and whistles.
For the beginner photographer, the APS camera is nice. My little sister has one and she is quite happy with the zoom and wide angle that it provides. She doesn't get upset when the panoramic photographs come out grainy or when the city at night photographs are underexposed. Those pictures require greater control over the camera than APS is designed to provide.
For the amateur photographer, the 35mm film can only be replaced when technology improves the smallish nature of the film (24mm vs 35mm) so that reasonable enlargements can be made (realize that any improvement upon APS film has a similar improvement in other formats - APS will always have a disadvantage). The bodies for the cameras that use APS film must also reach a similar level of customization as the 35mm cameras. Also APS film must be able to be made into slides for even higher quality photographs.
As it stands now APS and 35mm address different markets with some overlap. APS is not poised to move into the higher end, and 35mm already is firmly entrenched in where APS is entering. The best analogy for this is that of the Macintosh and PC. APS is the up and coming easier and friendly format entering into the market of the 35mm that is often seen as clunky and old but yet very customizable.
Black and white film still exists and is often used - yes, not quite as often as color print film, but there are cases when black and white pictures are the only way to go (newspapers, magazines, amateur darkroom work, artistic, etc...). I happen to have picked up 2 rolls of black and white film this morning.
One year later... (and about 5 years since APS was launched), 35mm is as strong as ever. Digital is competing with APS for the consumer market and slowly gaining share.
The cost for development for APS film hasn't gone down - if anything it has gone slightly up. It costs about twice as much to develop a roll of APS film than a roll of 35mm film. Yes, there is Black and White film for the APS camera system.
It appears that many of the traditional camera makers are leaving the APS market. Nikon has just (December 2001) discontinued its Pronea line of APS SLR's. The only two companies that appear to be sticking it out are Kodak and Fuji. This comes as no surprise when examining the strategy, it is much the same as for game consoles. The big, expensive thing (in this case the camera) is sold at a lower cost than it should be and profits are made up on the accessories (film). The more traditional camera makers just don't compete well.
Another major issue with APS is that the promises are still vaporware. There are a number of features that were promised with the APS camera such as mid-roll change, and "don't print", and other features.
For example, of all the cameras that Kodak makes, only the Kodak Advantix 5600MRX camera and 5800MRX support this feature - the most celebrated of the features for APS... and the 5600 camera was released in 1996 in limited quantities.
All this being said, I have recently picked one up. Granted, its a real SLR camera with through the lens viewing and interchangeable lenses with a Nikon mount. It is a nice light weight camera for tossing those shots that I'm not too concerned about on... though, at an added cost (I don't really care to pay 2x the cost of 35mm processing for those 'hmm, this might be interesting, let me grab my cheap camera' photos). The advantage of the Advanced Photo System is the modification of the "rule of thirds" for photo composition. With the APS camera, the different sized prints (all be it lower quality) allow the photographer to frame shot in new ways.