To my knowledge Amex takes the most off of every credit card puchase (5 cent or something like that) so im suprised that they werent able to come to an agreement. My work amex, I'm finding, isnt accepted at a lot of food places because they dont make as much profit off the purchase.
Costco was a HUGE part of AmEx sales (8%). However, like Walmart, Costco is in the business of finding consumers the best deals and partnering with whoever has the best offer. AmEx probably couldn't match what Costco was asking in terms of cutting usage fees and as a result were forced to turn down the contract renewal.
Rest assured, trekkie, you have the rest of this year to use the card and after that, you can just sign up for whatever Costco introduces next. As much of a pain in the *** as that is, Costco is looking out for ya buddy.
Concerning credit vs. debit, it's worthy to note that debit is really for people that have spare cash in the bank while credit is mostly for people who live hand-to-mouth (or so it's been explained to me). However, as was mentioned by Mike, it is good to have a credit card in order to build credit even if you can get by using a debit card. Building credit is important later on to getting loans from banks primarily, esp. for houses, cars, etc.
Granted, the quickest way to build credit is by actually getting a loan and paying it off timely. Credit cards allow you a chance to build credit slowly and work best for people who don't need big loans, but rather just need to make small, frequent expenditures. Keep in mind that you don't have to go with the major credit card companies either. Virtually every bank or credit union has their own credit cards you can use with small lines of credit and good interest rates.
Overall, just make sure you do your research first and find out what the best option for YOU is. There is no one-size-fits-all when it comes to credit cards, and there are plenty of options to choose from. No need to take the first credit card offer that comes your way. Just be responsible in how much you use it and making sure you pay it off ASAP and you'll be fine.