Yes there has been some decay since 1998 (unsurprisingly), but in the past years it's been nowhere near as dramatic as it may seem at a glance - the charts are just difficult to compare due to the jumping scales and colors.
Freenode, for example, keeps growing steadily since 2007, many of the smaller networks show pretty much a flatline or cross-shift in the same timeframe.
As it stands the networks still serve ~500k daily users; seems a bit early to call it "dead".