There was an interesting debate on the question "Objects Have Failed" at OOPSLA 2002.  I find Guy Steele's opening remarks on the question pretty compelling:

Another weakness of procedural and functional programming is that their viewpoint assumes a process by which ?inputs? are transformed into ?outputs?; there is equal concern for correctness and for termination (and proofs thereof). But as we have connected millions of computers to form the Internet and the World Wide Web, as we have caused large independent sets of state to interact?I am speaking of databases, automated sensors, mobile devices, and (most of all) people?in this highly interactive, distributed setting, the procedural and functional models have failed, another reason why objects have become the dominant model. Ongoing behavior, not completion, is now of primary interest. Indeed, object-oriented programming had its origins in efforts to simulate the ongoing behavior of interacting real-world entities?thus the programming language SIMULA was born.