Courtesy of buzzmachine is this truly excellent article: Dissecting the Media: Trust and Transactions. All I suggest is read it all and then come back for my thoughts. The strengths of the "new media" is that a) it can fact check anything in zippo time when it gets worked up about it. b) it can comment just as accurately on the base facts as the old media c) it has no taboos or incentives to gloss over inconvenient details
The weaknesses are that it can't generally create the initial reportage of facts - although in both Iraq and Iran the blogs have been very useful alternative news views and in other places blogs have reported events with a different slant to the old media - and that it can be hard to separate the wheat from the chaff.
A) is key for strengths. A good news organization will use the blogs fact checking abaility to guide its own researchers. As for weaknesses, again a good news organization will be able to act as editor/aggregator for the blogosphere. This will occur eventually, indeed in someways sites such as instapundit are already doing this. There may well be a business opportunity for a respected person or group to do the same thing.
I predict we will see "old media" caught with its trousers down numerous times over the next year or so as they adapt to the above. Some will fail to adapt and will be consigned to the dustbin of history.