Okay, so I'm still catching up. But I'm pleased to see that it now looks like Discovery will actually make it home safely (knock on wood.)
When Columbia was lost, there was a spate of articles essentially arguing that space exploration was either a) unnecessary, or b) better done by robots anyway. I reject argument A, and am lukewarm to argument B. Jim Lewis guestblogging at DefenseTech gives a recent example of the "unmanned is best" mindset. For specific tasks, robots can easily outperform humans, period. However, for general science or large-scale exploration, crewed missions are vital.
This isn't to say that the Shuttle should be maintained. The shuttle has never been a useful space vehicle, and never could have met the lofty promises that NASA made in the early years. (One flight a month??) There are two reasons for this, and both have to do with the basic design of the Shuttle.
The first problem is that the Shuttle is designed to carry both cargo and humans. This makes no sense whatsoever, as the cost of man-rating a vehicle is an order of magnitude higher than a cargo-carrying rocket. NASA orginally justified this choice based on the possibility of recovering satellites, that they might be brought back to Earth for repair and refurbishment. There are two problems with this scenario, however. First, satellites are usually obsolete long before they become damaged beyond repair, making it more sensible to simply de-orbit them rather than repairing them. Secondly, even if you theoretically did want to bring the satellite home, it would make far more sense to design an unmanned cargo shuttle. You could still use most of the same parts, but design two different models of Shuttle.
Of course, it probably still doesn't make sense to build a reusable cargo shuttle - disposable rockets are usually cheaper and more reliable. But this was how it was sold to Congress back in ye olde Nixon administration.
Flowing from this choice (to use the same vehicle for two jobs) comes the second problem - the design of the Shuttle launch stack. Because of the size of the combined passenger/freight Shuttle, the orbiter needs to be seated on the side of the volatile launch stack. A smaller passenger-only orbiter could instead be placed on top of a single rocket and launched without fear of falling debris, unlike the current Shuttle. As we've seen with Discovery, even years of attention aren't enough to eliminate the problem of falling debris. The far simpler solution is to place the orbiter out of the way of harm. Some have even argued that a top-launched orbiter might have survived a Challenger-style explosion during launch. In any case, splitting up the tasks of a reusable spacecraft really is the only way to do it - something NASA now seems to be admitting, 30 years too late.
This isn't to say that the Shuttle could not have been put to a more profitable use - I've become a rather passionate foe of the International Space Station, simply because it will be unlikely to serve any serious scientific or exploratory purpose. If you'd like to see a company that has better ideas for what to do with the Shuttle, check out these guys. They've got an excellent rebuttal to Bush's proposed Mars/Moon plan here. Critically, they are a private, for-profit group looking to do more than just science in space - they're looking to sell products and services back to the Earth, including Solar Power Satellites.
In any case, I hope the Shuttle program is put out of it's misery soon - frankly, the ISS is now so much less than it's original proposals that the difference between completing it or abandoning it is really negligible, except for the billions of dollars that have already been spent.