Yes I do portrait photography, and I understand completely and respect the situation with commercial photography. As for the 8x12 that has to do with market perception and me placing value in the work that I do, I don't disagree that yes you could print it larger for sure and if they had photoshop they could do a decent enlargement again , but then if they have PS they probably have a DSLR and they would not have come to me in the first place.
I would probably tend to disagree that people don't need prints, they said the same thing about newspapers (my F/T job) and a significant market sector will always want to buy the newspaper and feel it between their fingers rather than view it online, I think they same will always apply with photography as well, albeit that it may be a diminishing market.