Another current undergrad here (my fourth attempt at completing a degree) and I have to agree - lecture attendance may well be declining, but it's not just "because the students are lazy".

The university I'm attending provides podcasts and video streams of the majority of the lectures for most subjects. I still prefer to actually attend the lecture theatre in person (despite a growing tendency toward agoraphobia). And yes, there is a reason for this. In my case, it's because I have a minor hearing loss. This makes it hard for me to comprehend audio text without either subtitles or without matching lip movements to the noises I'm hearing so I can make sense of the sounds in context. Guess what the podcasts don't provide?

In the course of multiple attempts at getting a degree (in a variety of different subjects) I've been in classes with good lecturers, poor lecturers, lecturers who have public speaking anxiety, lecturers who basically read off their powerpoint (or PDF) slides with little or no additional content, lecturers who have speaking voices which are very quiet even with amplification, and lecturers who, while brilliant, can't speak in public to save their lives, and only really shine in a tutorial environment. There's a lot of variation in lectures and lecturers, and given most students have more going on in their lives than just a single subject (and particularly when you have subjects where there's a heavy private time commitment, such as computer programming subjects) if you have to shed something from a busy day, it's easy to choose to shed the lectures, unless there's a really pressing need to attend (or you've got one of the rare lecturers who really shines in the lecture theatre, and is capable of making the subject into something interesting).

One thing I've noticed across all subjects is that the first week of lectures tends to be heavily attended, with attendance gradually dropping off as time goes by down to the hard core of about 15 - 20% of the class who either, like myself and Callum (above), have reasons of their own for attending, or who are just that diligent. The majority of the class will be back for the final week's lecture, because that's when the majority of lecturers drop hints about what's going to be in the exam.

I can understand the VCs wanting to get rid of lecture theatres - they're large, they're expensive, they're difficult to maintain, and they need a huge amount of AV equipment to be useful in the current environment. Adding a lecture theatre (even a small one) to a building removes a lot of class space, and most lecture theatres really can't be used as general purpose halls, either. However, lectures are a sustainable, long-term solution to the problem of information delivery to a large group of people, and they're one that, for the most part, works. So don't get rid of all the lecture theatres just yet.

The lecture theatre is simply a cost saving exercise. The means by which one qualified person is used to present materials to much greater than the ideal of ten students, in fact upwards of a hundred students.
So learning cut back to a focus on tutorials or direct student teacher educational interaction and lecture type material altered to become higher production value audio visual presentations.
Those audio visual presentations can incorporate questions and answers for review of material but the whole intent would be to provide the initial information and research guide for the student, prior to tutorial attendance for greater detail and working through the information.
So think dropping cost saving lectures for a focus on more costly but far more educationally productive tutorials. In fact you can bet Universities will start competing based upon the quantity and quality of tutorial sessions, whose student tutor ratio should not exceed 1:10 ie 5 minutes per student in a fifty minute session, this ensures full student engagement.

Sorry Amanda, I disagree, students are students, not customers. The best analogy, and it is still left wanting, is the gym: pay your fees but that gets you membership which is about access, if you don't go or you don't train correctly, the gym is not liable for your lack of results - even personal trainers run an effort disclaimer. Students are members of the university or other institutional community. Unlike gym members, most university's rules provide for a student's membership to be revoked for lack of effort or progress. All your HECS or FEES have bought is access, no more and no less - there is no product or service entitlement apart from the TEQSA Threshold Standards (think of them as the intellectual equivalent of gym OH&S), and, therefore, no customer. On the other hand membership of lousy gyms declines and they go broke. If the teaching and learning and on-campus or virtual environment experienced by students is lousy, pretty much the same will happen to institutions in a demand driven funding regime.