Do you think the popularity of knitting and crocheting will continue to increase?

As per the previous poster, location is a key factor to consider (proximity to other yarn/craft store, accessibility, surrounding community, etc.). I think the knitting and crocheting craze eventually will taper off a bit, but we'll see; it's great for now. However, I do think that in my area (SF Bay Area) there are enough yarn stores right now, and I wouldn't be surprised of some of them don't make it. Combine the local outlets with the web ones, and the knitter/crocheter has a lot to choose from, especially the one who knows what she/he wants and can get it cheaper on the web. I buy my yarn both on and off the web, even though I do try to frequent my local yarn stores as much as possible since they are a great source of inspiration, creativity, assistance, etc. The key to a yarn store is to have a sense of what you like to make/design, develop a great space for shopping and interaction, and stock some yarns that you can't get just anywhere.

Knitting will forever be popular.

Like many before me have said, it's all about Location, Location, Location.

Good luck.

You might also consider macrame and quilting also as they are going very strong. Scrapbooking is strong, but is starting to fade and wouldn't follow along your fiber art theme anyway.