There are definitely many people, myself included, that will not click on paid listings. However, there has to be plenty that do. Otherwise we would not be witnessing the tremendous increase in this kind of online advertising.
I can testify to the fact that PPC type of listings get much higher click-thru rates than the old banner or other graphical tyes of paid search engine advertising which at last check weren't even generating .05% click-thru rates.
That is why I am of the firm opinion that if one is serious about search engine marketing, they should perform traditional SEO as well as PPC but traditional SEO should take precedence over PPC.
Bottom line IMO, do both if you have the budget and measure your ROI on the PPC carefully because many will benefit from it