I think that whenever a new type of games shows up, people will point to it as hurting what came before. The same thing happened with Magic.
WoW is the first really successful MMO. It dwarfs all the other ones. I played it for a short time. It was fun, but not more fun than painting miniatures or any of the console games I bought, so I'm not a convert. However, I know tons of people who play.
I don't think it's cut and dry clear that MMOs have had a big impact on tabletop gaming sales. Since 3e came out, RPG publishers have been hurting. A few rode the d20 bubble for a while, but that came crashing down for reasons too numerous to list here.
RPGs suffer from a weird, collective delusion that things were so much better 20 years ago. It's true that there were far more mid-tier companies back then, but nobody made a lot of money off RPGs even in the 1980s. I've read interviews with people like Greg Stafford who state that, even at the "height" of RPG mania, they were still making subsistence level wages.
We don't have companies like West End, ICE, or FASA who make only RPGs anymore. I think d20 had a big impact on that, and I also think that the rise of Euro boardgames has also had a huge effect. If you look at gamestores that have opened in the past two years, they tend to have CCGs, miniatures games, a small section of RPGs, and a boardgame display that is bigger than all the rest of the sales areas put together.
Boardgames are great for retailers because they cost $30 or more, the average person off the street can come in, buy one, and play it, and a boardgamer can buy 2 or 3 new games a month and still play everything he buys.
On top of all this, we don't have a fad product like Pokemon and Yu Gi Oh to keep retailers afloat. We had an unprecented run of 6 years where the latest kiddie fad was on sale that the FLGS that otherwise sold games to people like you and me.
