My sympathies are with the laid-off photogs, but I am quite certain that they were preparing for this. The news industry, both print and television, has been on a steady decline towards this for DECADES. Everyone who works in the industry knows this.
Look at the pics from the meeting. http://petapixel.com/2013/06/03/chicago-sun-times-photographers-react-and-respond-to-being-laid-off/#more-113195
This is a major newspaper in the third-largest city in the USA. (I do believe that this layoff has affected all the photogs at the other suburban papers owned by the Sun Times, as well.) It seems pretty clear that they have been using stringers (freelancers) for a while now. There will be no shortage of stringers arriving at breaking news, just as there was before. The paper will probably be hiring back its laid-off staffers on a freelance basis to do feature/editorial work as-needed.
I think the bit about finding video more important than stills is some sort of corporate BS, though. TV news organizations have been doing the same thing, cutting staff photogs (videographers) in favor of stringer video at breaking news and hiring freelancers on a daily basis. In the smaller markets, they cut staff photogs and hand the gear over to new reporters, turning them into "one man bands." So, although there isn't any shortage of news videographers, either, there definitely isn't a huge draw for them into the world of newspapers. If they are getting video, I expect they'll be getting it from whichever TV news department they've partnered up with in Chicago (I read the Trib and watch WGN, so I don't know who that is.)
I also don't know where this stuff about iphones has come from. I know somebody reported on a comment from a laid-off staffer that he expected the Sun Times to go with more reporter-generated stills, and I think that is definitely true. But I don't know why that automatically translates into iphones. More likely, they'll hand over something like a 60D plus superzoom and show them how to work it in scene/green box modes. The technical barriers to photography are falling down by the wayside. Certainly, reporter-generated images are going to lack the emotion and ingenuity of a true photojournalist. But it won't be gloom and doom, either. It isn't like the reporters are going to be developing Tri-X in their bathtubs.
The Sun-Times is going to continue to lose money and circle the drain. This is just going to add to it. But it is the same thing that has been happening for many, many years. I hope that the now-self-employed former-Sun-Times staff photographers continue to go out there and generate amazing quality images, and I'm sure they will. I also hope that they sell them to the highest bidder, and let the Sun-Times pay to get them.