Don't see annotation as a negative for digital text. If I really want to annotate a text, I usually find it easier to do electronically anyway. Annotations also become searchable & taggable and therefore 'social'. I was reading a blog post yesterday pointing out that we're almost at the stage where an ebook could link to the annotations and comments of other readers.
Likewise with the 'spatial cue' issue, Cathy, I know what you mean. With a familiar text I'm teaching I can often find a bit I need almost by feel! However, again, the advantages of e-text massively outweigh this. Last Thursday I had a Y11 English class finishing coursework on 'Of Mice and Men.' One of the students remembered the gist of a quotation he wanted to use. He'd been flicking through the book for ages looking for it before he asked me. I brought all my skills of memory recall, scanning and skimming to bear. And couldn't find it. Suddenly the solution dawned on me: I found a copy of the text on Google books; a quick keyword search and a few seconds later we had the exact quotation he needed.
Is the shift from print to electronic text a 'radical shift'? It depends how we're defining 'radical' I suppose. I think most electronic text more-or-less replicates traditional print text in a way analagous to how cinema more-or-less replicates the modes of traditional theatrical narrative. It builds on what people are used to, rather than tapping in fully to the possibilities of the medium.
Just as there is innovative cinema that pushes the boundaries (but is largely restricted to a specialised 'arthouse' audience), so there is digital media that radically reworks the way texts are structured and navigated, but that is limited largely to an 'elite' of enthusiasts.
Wikipedia may have altered the way information is collated and disseminated, but I think most users still read it just like a conventional encyclopedia, for example.
I'm interested in whether as educators we can (or want to, or should)be leading our charges towards a more 'radically shifted'model of textual consumption/production (prosumption). The general impression that I get from discussion in the blogosphere is that the kids are doing this stuff anyway, and education needs to 'catch up'with them. That's not the way it feels to me, though. I find most of my students (and my own kids)pretty passive consumers and quite often rather resistant to working more collaboratively or using web2.0 tools. The mantra of my sixth formers seems to be 'can we have printout of that, sir' after I've shown them some superb interactive online content. And I'm having a hell of a job trying to get my Lang/Lit group to collaborate on a wiki about their set-text, because, I suppose, they won't have to do that in the exam.