"It evokes science fiction to envision voluntary alliances networked across vast distances which challenge traditional nation-states, but it is already happening. Globalization, terrorism and events of the past five days, the past five weeks and the past five decades suggest that the nation-state may be undergoing the greatest shift since its emergence in Europe. Many of these pressures on the nation-state arise from what we could call virtual nations. The established nation-states must respond to these emergent entities or face the consequences."
"It's not that nation-states have to respond to the new networks, but rather, that nation-states need to die peacably and let panarchy thrive."
Have you read _Shield of Achilles_ by Philip Bobbitt ? I find the transition/paradigm shift/evolution to his network-friendly and nimble Market-state a functional possibility for the nation-state.
And considering that in 2006 we still have vestigal remains of aristocracies and monarchies in corners of the world, the chances of the nation-state vanishing, peacefully or otherwise, are dim.