It is when it's used according to it's strengths. CGI and practical effects have strengths and weaknesses that compliment each other very well.

Practical explosions and demolitions for instance are understandably expensive and dangerous. Depending on the type they also limit how often you can repeat the take, if at all. On the flip side it's becoming very easy to do convincing demolitions with a combination of simulations, stock footage and particle effects.

Practical effects can still beat cgi for that tangibility factor, especially on close ups and partial shots. Practical has a very hard time doing convincing full body creature effects though. The effects workers on even the most recent child's play movies talked about how it's next to impossible to do a convincing physical Chucky puppet running down the hallway in full view. It's a breeze to do full body creature animation in CGI, the more distant perspective of full body shots helps to hide the flaws in texture and tangibility of the creature while animation can make it more convincing than a puppet.

The real place where practical and CGI clash when it comes to costs is setting. Practical is far superior to cgi and green screens when it comes to building convincing sets. But it's damn expensive to build full scale physical sets for movies. The alien movies have always been great in this respect, all four of them as well as Ridley Scott's upcoming Prometheus have gorgeous physical sets and it shows. But CGI can really cut costs in this area, CGI sets is what keeps a lot of modern tv shows affordable.

Practical is mostly cheaper when it comes to props and other relatively small items that involve heavy interaction. (interaction makes cgi a lot more expensive to blend) But even then a lot of studio's prefer the convenience of being able to change their minds half a dozen times during post production, even if it does come with a price tag. The more interference a director has from studio's and producers, the less practical and the more cgi you'll see. Studio's don't like setting things in stone as soon as the camera stops rolling.