|The stupid question is the question not asked|
Your co-worker keeps telling you how Python is `powerful', why not tell him how Perl is powerful too? Each language has its strengths and weaknesses. If he claims that Perl has no strengths or Python has no weaknesses, stop the debate because it will get you nowhere.
If Python is better than Perl because it has simpler syntax, then LISP is better than all languages ever because the LISP syntax is the simplest. What sets Perl apart from all languages is its context dependency. An expression means different things depending on where you put it. This may be overwhelming for beginners. As you advance through the language, the language advances with you. Simple constructs are available for beginners.
Perl allows you, among other things, to write concise programs that are exactly to the point. Shorter code that is still readable aids greatly in development and debugging cycles. Perl programs can literally speak and say what they are doing. You don't need to spell things that can be inferred from the context.
As others have already mentioned, CPAN is probably Perl's selling point. With tons of modules written to do almost anything, writing some very involved programs is as simple as calling a function defined in one of the modules.
As for whether Python is replacing Perl or vice versa, I don't think either will replace the other. Python and Perl have very different design goals. Python programmers are different from Perl programmers. They think differently, and that's why they chose different languages.
If you really want to know what will happen if Perl and Python get merged, look at the Parrot language.