Well, I've seen a lot of crappy paintings AND crappy digital covers.
I think if the idea is good it doesn't matter how it's done, although, certain methods are better suited to different things. I like the "realistic" feel of certain photographic things, and the 'organic' feel of painted things. I guess it is easier these days to get noticed if you have Photoshop, a website, and a friend in a band. I do however think that one day it might be oversaturated with (obvious) photoshop covers, and if that happens people might go back to traditional methods for awhile for something "fresh". Traditional is always good. But I think if you can do something different enough, there's always room for everyone.