Well... while I agree that the post office may not be "vital" its still pretty important. I mean look up the prices for sending a letter via ups. The cheapest LETTER that you can send any decent distance is 27 dollars. That's just for a one sheet of paper letter.
If we were in a situation where there was no longer a use for non parcel post, then yeah, but I think we all know that's simply not the case, and it would cause some serious problems if any piece of mail you wanted to send cost you so much, or even 1/5 of that price.
It's defiantly a dying service (in general) as we get more and more paperless, but its still something important to many people, and many many businesses. I read that the mailing industry accounts for 6% of the gnp, and that 75% of the businesses in that field are dependent on the usps infrastructure.
I know a lot of people would say "oh that's just junk mail", that's true, but those are businesses. Fairly big ones.
Anyway, its clearly not working as it sits right now, and they need to make some big changes someplace.