Dying? Not really. Do note that early in a system's life, there usually are fewer RPGs due to the time it takes to make one. Looking at the release schedule, there are quite a few still being worked on; Wii will be getting things like The Last Story and Tales of Graces, and PS3 will still be seeing things like 3D-Dot Game Heroes. And I'm sure there are more unannounced ones, too.
This isn't to say that I think part of the JRPG category isn't sickly. "Graphics are everything" Final Fantasy has raised the bar- perhaps too much, causing a detriment to some sales. (Not to mention the fact that people will expect Squeenix to keep topping this bar, even for non-FF games.) Other games from other publishers are trying to mimic their western counterparts. I think that the focus on JRPGs has shifted considerably, and this is leaving some JRPG fans feeling alienated, also leading to lower sales. I think that if they go back to focusing on the story and challenge, without taking away the exploration that some of them have done, they could see another slight uptick in sales. But yes, RPGs have always been a niche. It really comes down to keeping costs under control, Squeenix's budgets I feel have gone out of control, and some of the people wowed in by FF's graphics are expecting stuff that simply costs too much for most RPGs.
Now, if we look at portables, they're thriving. The "graphics" FF don't exist here, so the pressure for an "ooh, wow" game is severely reduced. Budgets stay in check, games are easier to profit on, and more can be made. Not to mention that these systems are also older- more time has been alloted to them, and thus, the time needed to make the RPGs has already passed. So they can come out, and reuse the engine to continue making games.
