I\'ve seen a trend to move business logic out of the data access layer (stored procedures, LINQ, etc.) and into a business logic component layer (like C# objects).
If you are building a layered architecture, and the architecture contains a dedicated business layer, then of course you should put business logic there. However, you can ask any five designers/architects/developers what 'business logic' actually is, and get six different answers. (Hey, I'm an architect myself, so I know all about 'on the one hand, but on the other'!). Is navigating an object graph part of the data layer or business layer? Depends on which EAA patterns you are using, and on exactly how complicated/clever your domain objects are. Or is it perhaps even part of your presentation?
But in more concrete terms: database development tools tend to lag behind Eclipse/Visual Studio/Netbeans/; and stored procedures have never been extremely comfortable for large-scale development. Yes, of course you can code everything in TSQL, PL/SQL &c, but there's a price to pay. What's more, the price of having several languages and platforms involved in one solution increases maintenance costs and delays. On the other hand, moving data access out of reach of DBA's can cause other headaches, especially with shared infrastructure environments with any kind of availability requirements. But overall, yes, modern tools and languages are currently moving logic from the data(base) layer into the application layer. We'll have to see how well it works out and scales.
It is ALWAYS a good idea to separate your layers. I can't tell you the number of times I've seen stored procedures that are VERY gnarly from lots of business logic written into the sproc. Also if you modify your complex stored procedure for whatever reason, you have the potential to break EVERYTHING that uses it.
Us devs at my company are moving to LINQ w/ the EF and dismissing the stored procedure unless we absolutely need it. LINQ and the EF make separating our layers a lot easier...when the EF is not being difficult. But that's another rant. :)
Business logic in the data layer was common in client/server apps, as there really was no business logic layer per se (unless you could really, seriously prevent anyone from connecting to the database outside the application). Now that web apps are more common, you're seeing more 3- and 4-tier apps (client+web server+app server+database server), and more companies are following best practices and consolidating business logic in its own tier. I don't think there will be any less work for database developers, they'll probably just become the ones that write the business logic layer (and let an ORM tool write most of the database layer).
The reason I've seen this trend is that LINQ and LINQ to SQL ORM give you a nice type-safe alternative to stored procedures.
What's "right" is whether you benefit from doing this personally.
If the applications is small with a short lifetime, then it's not worth putting time into abstracting the concerns in layers. In larger, long lived applications your logic/business rules should not be coupled to the data access. It creates a maintenance nightmare as the application grows.
Moving concerns to a common layer or also known as Separation of concerns, has been around for a while:
Wikipedia
The term separation of concerns was probably coined by Edsger W. Dijkstra in his 1974 paper "On the role of scientific thought"1.
For Application Architecture a great book to start with is Domain Driven Design. Eric Evans breaks down the different layers of the application in detail. He also discusses the database impedance and what he calls a "Bounded Context"
Bounded Context
A blog is a system that displays posts from newest to oldest so that people can comment on. Some would view this as one system, or one "Bounded Context." If you subscribe to DDD, one would say there are two systems or two "Bounded Contexts" in a blog: A commenting system and a publication system. DDD argues that each system is independent (of course there will be interaction between the two) and should be modeled as such. DDD gives concrete guidance on how to separate the concerns into the appropriate layers.
Other resources that might interest you:
Until I had a chance to experience The Big Ball of Mud or Spaghetti Code I had a hard time understanding why Application Architecture was so important...
The right way to do things will always to be dependent on the size, availability requirements and lifespan of your application. To use stored procs or not to use stored procs... Tools such as nHibrnate and Linq to SQL are great for small to mid-size projects. To make myself clear, I've never used nHibranate or Linq To Sql on a large application, but my gut feeling is an application will reach a size where optimizations will need to be done on the database server via views, Stored Procedures.. etc to keep the application performant. To do this work Developers with both Development and Database skills will be needed.
Data access logic belongs in the data access layer, business logic belongs in the business layer. I don't see how mixing the two could ever be considered a good idea from a design standpoint.