This is perfectly normal for the last generation leading console. In fact it's possibly doing worse.
the PS1 was still selling hardware and games well into the 6th gen, in fact for the first 2 years of the generation I think it sold more hardware than the Gamecube or Xbox)
In America I think we are starting to get a trend of low PS2 sales whenever the Wii has decent supply, so in one territory at least the Wii can kill the PS2 off (at least to last years GBA levels) just by having ample supply.
In Europe I think it is a combination of Wii and PS3 killing it, and I think it might take a bit more time and yes, fewer releases for it. (which is not because of the Wii but inspite of it, if my memor serves me correctly there was a version of FIFA 2005 made for PS1 though so we can probably expect a similar thing with PS2 (FIFA 2009 and possibly 2010)
In Japan I don't think anything is holding PS2 back, it was dieing already there, however because of PS3s poor showing it looks like it is doing ok.
