Yes, a lot of LBSs are really doing things quite badly, especially where slightly more experienced or demanding customers are concerned.
I would think there are two main modern challenges to their role:
1. Internet sales undercutting their pricing
2. Availability of low cost bikes from mainstream sources (Target, Walmart, etc)
If bike shops can'd compete on price they have to distinguish themselves in the areas where they can potentially compete: product and general advice, follow-up support, easiness and confidence in purchase decisions, speed of acquisition, customisation, and feel-good factor. However, instead of accepting the pricing situation and maximising their strengths, many shops seem to try and bully, scare or guilt their potential customers into buying from them. Surely this rarely works and either way it will leave a bitter taste in the customers mouth?
If selling bikes isn't profitable, try and make the money elsewhere. Do what you're good at. Don't try and sell a bike with the promise of free servicing. Just try and sell your excellent servicing. If a shop knows they can't compete on price, they'd be better off simply telling the customer that, and explaining their choices, without judgement or anger. In all seriousness, a bike shop who owns up to the fact they can't compete for a particular sale but gives advice and/or remains pleasant anyway, will buy themselves good will and convey a sense of honesty and helpfulness that is what will keep people coming back. Then, when the stuff you're good at comes along, be it small day to day purchases, servicing, or maybe even fitting, they'll be back. If a shop was abrupt with me when they realised I was probably going to buy a bike online rather than from them, I wouldn't come back looking for other services later.
I have a Canyon roadbike. Any shop will know I bought it online. If I know they openly resent that, I'm not going to let them service my bike. I'll go to the guy who accepts that online bike sales are legitimate and sensible and is happy to do the thing he's good at, i.e. service the bike. Trying to shame customers for making good purchases will never work in the long run.
On a slight tangent but a related note, a friend of mine bought a new road bike from the LBS a few years ago. He got a decent deal on the bike and all was good. He was a reasonable cyclist, not hugely strong but alright. He mostly cycled on the flat. A few weeks later he came for a ride in the mountains with me and he really suffered on the steeper climbs. I had a look and saw he was using a 12-25 cassette. I suggested a bigger sprocket would really make a difference for future rides and recommended he switch to a 12-27 or similar cassette. I even mentioned that I'd seen them on sale at
http://www.chainreactioncycles.com the previous week. He decided to go back to the shop and give them a bit more custom instead. Commendably, he preferred to spend his money locally and he'd probably get them to fit it while he was at it. So he went back to the LBS and asked them if they had a 12-27 cassette in stock. They told him he didn't need it. He explained that he had started riding in the mountains and planned to continue but had found he needed a smaller gear. They told him he didn't need it, they wouldn't sell it to him and he just needed to train more.
My friend left and has never been back. He bought a cassette online, I lent him my chain whip and lockring adaptor. Who needs that crap!
I've detected hints of this sort of thing from other LBSs myself. An attitude of superiority like they were doing you a favour selling you something. Also, less subtle, when I was shopping for my tri bike, an attitude that they were entitled to your custom. I ended up buying my tri-bike online as well. If I remember correctly, I got my Felt IA14 for €3180 online rather than €4299 locally. I don't hold that against the LBS. I'm sure it's not their fault, but they are making a huge mistake when they imply that it's the customers fault. Do they really think I'll pay about 33% more, more than €1100 for their advice (which I don't need) and a couple of free services, that I can do myself and are only worth maybe €150 anyway? They need to fix the cost problem if they can or accept the situation if they can't. There's no point in getting annoyed with your customers. It's not their job to support your business. It's your job to attract their business.