I do remember SideStep – that’s a great product. I don’t think sidebars are a good standalone business – and I feel the same way about widgets for that matter. Nowadays there are a few services that I don’t mind having with me on a persistent basis. To your point, there are very few services that cross that threshold. But I don’t think that means that other folks won’t compete for that real estate. I’d expect casual games, social networks, feed readers, and email service providers to look to get you to install sidebars.

Interestingly, SideStep has done very well since, but has emphasized its website. If I think about what it takes to drive interactions with a service, a sidebar requires:
1) find and install (properly)
2) use
3) deliver some sort of revenue-producing activity in some portion of the sidebar, in addition to my content (unless, like SideStep, the content itself is links to commissionable

By contrast a website:
1) doesn’t require an install, so fewer steps between acquiring and driving queries
2) you can drive people to a destination via web media purchases (you can with a sidebar, but it requires an extra step to install and use)
3) much more screen real estate to dedicate to revenue-producing activities as well as content

For me, the “bar” to installing something in my browser (other than unobtrusive Firefox add-ins that live in the top or bottom bar) is very high, and I have yet to find one that I didn’t tire of–I’d just rather have the screen real estate.