It's sad to hear my hometown paper (The Palm Beach Post) is cutting back, but I'm not surprised at the other angle mentioned by Sarah Schewe of Editors Weblog - more journalists switching over to public relations.
With Web 2.0, the skill sets of journalism and public relations may overlap even more than they used to. The values, however, are still different (i.e., public relations people do value advocacy). And there's no shortage of advocacy online. Fairness and balance may be the first casualties of shrinking newsrooms.
For what it's worth to those outside academe, we're still trying to teach those values and an understanding of the differences between reporting and advocacy.