I think consumers can discern quality and value; if they couldn't there would be no need to constantly improve the appearance of movies, TV, advertising, print media, etc... The clients I'm working with are more knowledgeable about quality and value and technology than ever.
I expect business to be down this year, but I won't be blaming photographers who work for free. The blame clearly lies with the Wall Street con artists that trashed the economy, the incompetence and neglect of the executive and legislative branches that allowed it to happen, and the non-stop doom saying of the media. If people have money to spend they will purchase quality.