The area has a nearby population, though not a big one. Will three condo towers suddenly make the area jump to life as a 24-hour happenin' place? Does Little Italy depend on condos to make it work? No, it attracts people from all over due to it being established as a nightlife centre, though the local population (plus nearby U of T), good transit connections and easy accessibility help.
There's two different, mutually inexclusive things going on. Is the Distillery marketed right? Is the tenant mix working? Will three intrusive condo buildings save the district? But are the new residental buildings done in a way to happily co-exist with the old, or is demolition and overbearing towers the only way to make it work?
I don't see it as an either-or thing here, though some seem to frame it that way.
The area will get its resident population once East Bayfront and West Don Lands start to fill with people as well, though that will take more time.