Yes, the penny should no longer be part of American life. Did you know that it costs more than a penny to produce one? (Heather and the kids did a tour of the Denver Mint last year and found this out.) Since this extra money comes out of the government, somewhere, it would save some money to not make them anymore.
My suggestion would be to round down 2c and under to zero and up 3c and over to 5c. Electronic transactions could continue to use non-zero and 5 cent increments.