I think a lot of advertising and propaganda from the cable company confuses the issue. They are certainly trying to capitalize on it.
In my area, a lot of Family Cable (TBS, ESPN, USA, etc.) channels are slowly migrating to digital only. It does free up lots of bandwidth for data, voice, and more digital/HD service. FiOS has abandoned all analog service in this area. My cable company says that it intends to keep it's analog broadcast basic tier (about 22 channels) for now. It will probably change in the next few years.
In general, you can fit 6 standard definition digital channels, or 2-3 HD channels in the bandwidth of one analog signal. The number can be higher depending on how much compression the cable company wants to use. But with the compression comes degradation in picture quality, which becomes very evident in larger displays.