It is the same with Range Rover, and I am not keen either. Maybe it is a way for the manufacturers to try to keep owners getting their cars serviced by Main Dealers? Not sure if Independents can get access to the online system?
I am not keen either as I usually switch to non-dealer servicing when out of warranty so will need to be diligen about keeping receipts. I was told that you could buy a service book from the dealer but I am not so sure they print them anymore.
This is no different to the way my Audi's have been serviced for the past 5 years. Essentially the service record is on the key, so at any time you can go into a dealers and they will print out a service record for you. Likewise, everytime the car is serviced they will (or should), print out and updated version of the service history and place it in the service folder in your car.
As for independents being able to update the system - some can, some can't, they need to be VAG approved to do it (and many are these days as they can service Audi/VW/SEAT/Skoda using the same system).
Alternately you can always view your service history on VW Connect.
So actually to me its a much better system, as you can't lose the service book.