The physics card as a hardware device will die. Nvidia spokespersons were very precise about that as they said that the current PhysX cards will be the first and the last of their kind.
Nvidia will implement PhysX instructions into CUDA and the GeForce GPU should take over the physics hardware role.
If you have a PhysX card, you can definitely be sure that that it will be the last one to launch. Ageia becomes just another brand that Nvidia swallowed, and the list includes 3DFX, ULI, Mental Ray, Aureal and some other big names.