I remember reading a study that suggested that having a mobile library with onboard printer to print your request instead of a paper loan, would work out cheaper. Each library loan approximately worked out to be about £6. Libraries aren't really free.
Now I'd personally prefer any book or text over the wire, to spending over £4 getting to my local library, where the seating is crap, and I can't hold a cup of coffee.
In the US, many libraries have a system called Overdrive that offers ebooks (and audiobooks) for borrowing. It's essentially a free version of this service, but with better selection.
Actually, I bet most of these books are published by Amazon and are Kindle exclusives. Then they manually add in a few hundred or thousand well-known books to make it look like a grand selection.