Reading this thread in the Kindle Boards brought me back to the question.
I have never sought publication as a fiction writer, and I haven't written with any reader in mind other than myself. So I do wonder whether other writers are conscious of writing for someone in particular.
I wrote a lot of love poetry from the ages of 14 through 25-ish (most of which is mercifully lost), much of which was written for three real women. But some of it was written for an imaginary woman - and I developed a very strong sense not only of who she was, but of her existence as a real person, much as one does of a strongly developed character in a novel.
I realise that some writers have an audience in mind. A writer who is not a graphomaniac is typically a storyteller of some sort - and since a story is told, so the reader listens. One can easily imagine that much as a writer for children might tell her stories to a real child, so a writer for children might tell a story to an imaginary child. The writer might imagine herself as a child, and tell the story that she would have liked to have been told. This ties in to the issue of what stories are for; more on that another time.
I think that the novelist should - insofar as anyone can suggest what a novelist should - write with the act of telling in mind, and with the act of telling in mind, have in mind a strong sense of the listener or listeners. I would even go so far as to suggest that the listener should be as well developed a character as any of the characters in the novel itself - if not even more so.
I am well aware of the current (and in my opinion slavish, obsessive and infantile) fashion, especially in fiction for YA and non-adults, for the protagonist as reader avatar. I think this arises from a failure, perhaps largely on the part of Hollywood, to understand the process of identification.
While the protagonist ought to be someone that the reader can identify with, he ought not be someone that the reader identifies himself as. (Unless the aim of the author is to help teenagers through a difficult time, like the incomparable Judy Blume.)
The e-Book market is showing that readers like being kept waiting for the next part, and enjoy downloading it, and even paying for it. This is what the profession of storytelling was all about, before the advent of Big Publishing. Coming full circle: the Kindle Boards topic is about motivation to write. I think that a strong motivation can be knowing that your listener is there, waiting to hear the next part of the story. If he has wandered off to read comics, probably the story wasn't all that good in the first place. But if he's waiting impatiently to know what happens next, then not only do you have a good story, but you also have a business model.