First, I agree with Nathan that as e-books come to comprise more and more of the market, electronic self-publication will become more popular. I also agree that this "sudden deluge" is, in fact, already here, and that it's not going to substantially impact anyone's reading or book selection habits. At least, not yet.
I disagree with Nathan on the point that these extra books will continue to float around in the ether forever without impacting your reading experience (much as all those physical books you never think or care about do). Without an organizing force or infrastructure behind them, I don't think the e-book market will self-regulate any more than than Internet discussions or chat rooms do. The e-book market needs the equivalent of threads and moderators, otherwise I think the loudest (not necessarily the best) voices will win out and the consumer will have a difficult time finding material that, for lack of a more tactful turn of phrase, doesn't suck.
To be fair, there is sort of an organizing force already at work in the book world (p- and e- alike), and that's the consumer review/word-of-mouth. I do think that consumers, by reviewing e-books and participating in a system that rewards well-received books and does not reward garbage—or at least, material considered unsalable by the majority of people—will be able to give a semblance of order to the electronic market. To be honest, though, that's only part of the equation.
A recommender system relies on participation from members, and while I'm certain there is no shortage of people with opinions on the Internet, there are some genres and topics that are more likely to draw reviews than others. Additionally, the more niche the topic of the book, the smaller the audience and the fewer reviews, meaning a bad review or two by an unhinged reviewer could sink an otherwise promising title.
As in the physical book stores of today (rapidly becoming the physical book stores of yore), I think there's going to have to be an organizing force on the part of the larger publishers; that is, a system by which they use their extensive marketing budgets to ensure that their titles are given prominent placement in electronic venues operated by companies like Amazon, Apple, and Google. A system that is already in place in the physical book store and beginning to grow in the analogous electronic environment. That is to say: co-op.
In short: I think Nathan is generally right about the future of publishing, but I think any kind of democratization implied in the "infinite book store" is illusory (though it's totally possible I inferred a kind of democracy in Nathan's vision that isn't there, and if so, I apologize for having misunderstood). Yes, the electronic book stores of the today/the future are/will be orders of magnitude larger than the stores of today, and yes, they will be full of a lot of great books and a lot of crap. I think that future depends on better methods of differentiating the two and communicating that information to the reading public.