I think "fad" is a little strong. Plenty of folks are using gmail and Google docs, for example.

I do think there are limitatations to running in a browser; World of Warcraft isn't likely to do so anytime soon. But I don't see any reason to believe that more apps need a desktop environment than don't. Rather, I see web browsers gradually getting more and more capable (especially within organizations that can make the choice to skip IE compatibility).