While the news definitely has a place, the main question that needs answering in my opinion is what information and communication do people actually need to play a meaningful role in society — and, arguably, this goes way beyond news. The subsequent question (not answered here) is what can be done to ensure that this actually occurs.
News attaches prominence on immediacy: What's happening right now is the all-important factor. And for that reason, news itself is often literally useless. It can be very entertaining and enticing, but it falls flat in the usefulness department when the voting, invasion, or bus crash, has already occurred.
When the news is the only thing that matters, the factors leading up to a news story as well as the consequences and implications that follow the story do not receive the attention they deserve.
Focusing on news is a way to entice a society with attention deficit disorder. And months after the news story, the audience can't remember who was bombed (or the reasons that were provided) or where the famine took place (or what factors helped cause it).
This also helps can help instill a feeling of helplessness (and/or cynicism and/or ignorance) because we rarely learn about roles we might play since we didn't see the news coming and we don't see where it's going or what might come next.
News preempts the important — and often unrealized — products of journalism that we could call the pre- and post- news. News shouldn't be the "holy grail" but it could serve as a foundation for developing and disseminating that matters.
Postscript: I developed the above in relation to the recent Journalism that Matters (Un)Conference held in Seattle. This definitely overlaps with the great concept of "Slow News" that was introduced at the conference. I have to admit it took awhile (a few minutes at least) for this concept to grow on me. (I'm now hoping that somebody will also post a draft Slow News pattern to the Liberating Voices pattern language site.)