Well from what I understood, they convert local currency into BTC, so as long as local currency exists, there will be a real use for BTC ATMs.
The moment local currencies die out... physical bitcoin coins, (or a percentage of them) are most likely going to happen. (the amount of times the battery on my phone is dead... bizarre)
Having a trusted entity, distributing coins, always having them digitally, will be very handy. Casascius started this, in the right way imo (having private keys in the coin). But I would see a couple of big entities (formerly known as governments) pop up, having a big amount of bitcoins, and distributing physical coins, always backed by the bitcoins they have. Basically building a layer on top of bitcoin, to be able to do fully physical transactions. (like we do real cash txns right now)
I might prove handy, but it all depends on peoples willingness to adopt it.
update: Casascius explains the problem really well,
http://casascius.wordpress.com/2013/04/24/i-made-a-video-as-a-reply-to-ron-paul/update2: you want the ATM for the same reason you want a regular ATM to withdraw cash. (either by currency converison, or by conversion from digital to physical, or from physical to digital)
i watched that entire video. Its a way to explain bitcoin to people > 70 years of age, or IQ < 70, and they would probably come out more confused.
You don't need to turn bitcoins into physical objects or make impressions of rocks into paper to explain bitcoin to normal people. People get it. Its an e-currency. People are used to "virtual stuff" these days. You can't actually see money in your bank account when you view your statement online. Its just there.
I think the idea of people walking around with physical bitcoins in their pockets is complete nonsense that will never happen, and actually very condescending. The "youf" would ltao
The bitcoin network, the blockchain, is the trusted entity. That's why it works. We don't need rocks in our pockets
