The internet is an ever changing world and in order for businesses to succeed online then you need to stay abreast of those changes. As of late many social networking sites have gained in popularity and in value. Sites like YouTube.com and MySpace.com are taking the internet by storm and the trend will continue as time goes along. Over the past couple of years there have been an influx of these types of sites and many of them have become very popular in a short amount of time. As more and more people find and use these types of sites the more important they will become for driving traffic to your sites.
Web 2.0 is a broad term and many people will define it differently. Wikipedia defines Web 2.0 as a second generation of web applications designed to foster a community and allow interaction between visitors of a website. In a nutshell this is a very good definition of what the Web 2.0 paradigm consists of and if you think about the popularity of sites which utilize these techniques then you should realize you need to position your web business to take advantage of these applications.
Visitors are becoming more internet savvy and as a result they expect more from a website. The days of writing as an authority on a subject and reaping the benefits of massive traffic are coming to an end. This is not to say that there will not be a need for information type sites in the future as there will be a need as content is still king, but the methods of displaying that content will need to change. Will you change or be left behind. Once this web 2.0 craze is over then you will start to see sites built with Web 3.0. Web 3.0 will make the changes Web 2.0 has introduced look pale. People want and need more interactivity in websites and the websites that keep up will profit in the future.

I am sure they will coin the phrase “Web 2.1″ or say possibly “Web 3.0″ next, just like any other BETA software development projects. I suggest something like “Web 2.006.12b” to represent BETAs and a date (2.006 is year, .12b means beta for month #12 which is Decmeber).
Search for more Web 2.0 stuff on http://www.web20searchengine.com