According to a Boston Herald article, only 2% of Americans read blogs. This sure makes it seem like blogs are over-hyped.
There are a couple of things to consider, however. As mentioned in a blog entry by Steve Rubel, this probably underestimates the influence of blogs. The people reading blogs, like the press for instance, are probably more influential than the average person.
Another factor to consider is that a lot of people are probably reading blogs, but they don’t realize it. Whenever someone searches on Google, MSN or Yahoo, the search results are always full of blog pages. People click on them and read them without realizing that they are reading a blog. A more accurate accurate count of the people who are really reading blog could be done by some company, like Alexa for example, who keeps track of surfer stats.