Just got back yesterday from Bermuda.
My wife and I have been using the Internet to plan and book our trips since 1999. Even booking things online in the days before secure connections (SSL).
For this trip, we researched destinations on LonelyPlanet.com and Yahoo Travel. Once we narrowed it down we went to the official Bermuda website, read some of the material online and filled out a form to have a cool customized booklet mailed to us with the information we chose (so no useless info on sports or shopping).
We researched and narrowed down our hotel options online with help from TripAdvisor. We needed a hotel with kitchen and separate bedroom as we were travelling with my "energetic & enthusiastic" 2 year old daughter. We found Surf Side on Bermuda's South Shore and checked out their website. Tried reserving online but that this functionality didn't work, so we booked via email and phone calls.
We checked our air fares and booked online via Expedia. Read about the ever-changing carry on rules and carseat restrictions online. Later, we got our e-tickets from Expedia and checked in online with Air Canada (though this didn't really save us much time as the line for those who had checked in online wasn't open so we had to line up with everyone else).
I also read a few forums on Bermuda, including a good one on Frommers (or was it Fodor's?) that gave us a good idea of what to expect. The reports on the extreme costs of food thankfully alerted us so we brought a lot of our meals (Kraft Dinner and Lipton Noodles). This was great as it is hard to find a lunch for under $50 there. (Bermuda is not cheap!)
I thought about checking my work emails while I was away as the hotel provided free Internet service in the lobby. ButI quickly dispensed with that idea.
And of course as soon as we got home our trip photos were posted on Yahoo Photos and emailed to friends.
Other trips we have researched online and booked hotels directly. We have found some really great locations that fit our needs perfectly in such locations as Quebec City, Ucluelet B.C., Krakow, Bratislava, Hong Kong, NYC, Amsterdam, Jasper, etc. Our travels wouldn't be half as good without the Internet.