If the arXiv had referees, would conventional journal publications still make sense?
I used to think in a way similar to the question, but I had a meaningful conversation with a prestigious scholar one time in graduate school, who pointed out that I was missing a key purpose of journals: permanent archival.

The arXiv has been around for about 25 years. We have no idea whether the papers on it will be readable in 100 years. But we know that we can read documents on paper from ancient Egypt, and we have every reason to  believe that journals printed on paper and stored in archival libraries can last just as long.  

The scholar I spoke with was not particularly worried about refereeing. He was worried about whether his work would still be available in 1000 years. Of course, I didn't ask him if he thought anyone would still be interested in it :)