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Has 'Salesforce1' made it obsolete? Or there is still some functionality which is supported by only classic & not Salesforce1.

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Yes, as per the Salesforce1 guide, you should still use Salesforce Classic if you need offline support. The guide states

Salesforce Classic remains the best option if you need offline support, - use of Custom App (not Salesforce1 Platform) to configure and control complex offline behavior (Mobile SDK only)

This is because Salesforce1 does NOT provide any offline support at the moment. Based on the Spring 14 release notes and the Intro to Spring 14 webinar dated 15th Jan, it's not clear as to whether the offline support will be included anytime soon. This has also been discussed here.

Of course, Salesforce1 offers several new features that were non existent in Salesforce Classic. You can read more about it in Salesforce1 guide or threads like here and here.

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