One day, we won't be able to find a reason to buy a discrete gfx cards, integrated gfx will be enough for all of us. Believe it or not, it will happen!.
Sure, for the average non-gamer. But gamers who typically want the best performance will alway opt for a discrete GPU. Combining the CPU & GPU will create a price barrier for those people who wants the best graphics they can buy. Most games right now are GPU limited, not CPU limited.
Take the following as an example:
Just for the sake of argument, suppose Intel and nVidia are both one company who designs combo CPUs/GPUs. Should there be different several versions of combo chips that would fill in all the market segments? For example:
E6300/7300LE
E6300/7300GT
E6400/7600GS
E6400/7600GT
E6600/7900GS
E6600/7900GT
E6300/8800GTS
E6300/8800GTX
E6600/7300LE
E6600/7300GT
Etc.
I think you start to get the picture. If Intel/nVidia were to design a combo chip to fill in all or most of the different types of market segments it would have to produce too many product lines. 4 different CPUs and 6 different GPUs of various performance levels means that Intel/nVidia would need to design 24 different CPU/GPU combos to fill all possible market segments.
A simpler solution would be to match a weak CPU to a weak GPU, and more powerful CPUs to more powerful GPUs. The combo chips may look something like the following:
E6300/7300GT
E6400/7600GT
E6600/7900GT
E6700/8800GTS
X6800/8800GTX
In the above example Intel/nVidia would need to produce fewer combo chips, but it's to the disadvantage of the consumer. A hardcore gamer who wants the best possible GPU would be force to dish out big $$$$ for the X6800/8800GTX combo chip. That'll be a powerful chip, but the X6800 part will go to waste. A person who wants to buy a powerful CPU for a very large database would also be forced to by the X6800/8800GTX combo chip. In this case the 8800GTX part will go to waste since a powerful GPU core has no affect on improving performance of a database program.