The debate surrounding the digitization of health records is greater than ever as a part of President Obama's health reform plan. There are of course people on both sides of the issue and both make a valid argument. CNN and NY Times have articles on the issue. You can read a synopsis of both articles here.
Personally, I think that no matter what the negatives are it's an inevitable requirement that records become digital. I think the key is to work closely with health care professionals in both the development and implementation stages. With new technologies such as flexible displays I don't see why the new technology can't simply mimic the old to help transition old users.