Second, truepenny, triggered by but tangential to the current death-of-short-fiction kerfuffle, is talking about what short stories are good for.
I have a theory. And that theory is that, more or less, the current SFF short fiction market is a club scene. It's where the experiements happen, the riffs, the fast-and-furious back-and-forth, the arguments, the bubble and boil. The churn, if you like.
Is short fiction essential to my career? Nope. Does it make me a lot of money? Nope. Does it get me a ton of respect? Nope. (Generally speaking. I think I write pretty good short stories. Actually, no, I take that back. I think I write damned fine short stories [I mean, other than the part of my brain that can only see what's wrong with anything I do, but we're talking about the realistic part of the brain now.]. And if they're not quite hitting the core-readership right, well, that's something to work on. OTOH, I am very, very happy about my BSFA short fiction nominations.)
So why do I write short fiction?
Because it makes me happy to do it. Because I do think a vital and exciting club scene is necessary to keep the commercial market alive. Because short stories, with their quick rate of turnaround, consist of a conversation that we can have without the three-to-five-year delay of the novel conversation. Because we're jamming, baby.