In the context of Nikon's lineup, I think the answer is yes, the D800 does replace the D700. In the context of functionality in your own kit, it's a maybe, but maybe not.
That seems like a contradiction for this slot in the lineup - you'd expect the D700 replacement to be an evolution of its feature set. I think there are a few reasons why this evolution is not so clear cut.
First, the D700 was Nikon's second full-frame camera and its first "prosumer" FX camera. Which is to say, its niche in the market was not all that well defined during its design. At the time it only had to compete with Canon's 5D.
The D700 inherited the ground-breaking low-light capability of its big brother D3, which made it everybody's favorite "see in the dark" camera. It's unlikely Nikon intended at that point for the FX Dx00 to be a low-light specialist, it's just the tech they had in their toolbox at the time.
Fast-forward to today and this market segment now includes the extremely successful 22MP 5DII and Sony's 24MP Alpha. Nikon must decide if the D800 follows the D700's low-light heritage, plays megapixel keep-up with these other bodies, or makes a big splash. For better or worse, the opted for the big splash.
For those not looking more pixels, but looking for continued class-leading high ISO performance, it's unclear (but probably unlikely) that the D800 replaces D700 in your kit. It's also unclear if the D800 is actually worse at high-ISO than D700, but if it's about as good, that's hardly a reason for a D700 shooter to upgrade, unless they feel they need the pixels.
Take a look at the market segment however, realize that Nikon is much more interested in replacing Canons and Sonys in people's kits than D700s, and you'll see what the D800 can do that the D700 is not capable of, and that's really where Nikon's strategy lies. I predict the D800 is going to be in high demand for a long, long time, and that's where Nikon will measure its success.