Yes it will attract the senior citizens as well as the students of the society since they can have the useful information from there and spend quality time.
Most people can use own net or go to cyber cafes. It may not be feasible to provide free internet library in colonies. The older people will not be interested. Others may use in schools/ colleges, cafes and own laptop.
I think it's great idea as internet is a powerful instrument for empowerment this should be made available in whatever form to all sections of our populace.
I think before any such initiative from the government the corporates have taken a lead in this regard.ITC limited has been setting up e-chaupals in rural areas!