Is the concept of an album still relevant in a day and age when people want to buy single songs?

Is that really common? I deal in whole albums, only, which is typically why I end up buying things. I also tend to shy from compilations. There may be only one song on the album I want to hear, but the thing is, I might someday care about more, and it's better to have it now, available...

but with things like Apple's iTunes, it seems there's a coup going on where listeners want individual songs cheap. Is this good for music?

Probably not. Even now there have been hits which were late coming, or songs with cult popularity which weren't hits. I'm not sure that will still happen.