To be honest artist and animation has become alot better over the years, which, like the Xbox make things look more plain and unintresting towords new viewers. If an Xbox360 owner, went and played some PS1 games, he'd just complain and brag about the graphics.etc.
This evolution in artist ability has been credited on Newgrounds, before we'd find animations such as. There She Is, or Final Fantasy A+ - some kind of breakthrough in user flash animation. Now it looks mediocre and the bar has been raised significantly.
Newgrounds is not dieing, it's going through its cycle. Some old users leave, new users join, with new expectations, however we do not see any debating go on in the general forums anymore. I used to be a very active member of that!
Things come things die. But newgrounds is not living, therefore the choice to allow it to die is within the corrospondence of the users.