Thanks for everyone's replies so far. Although we have two RPG stores in my area, plus a bunch of general bookshops that stock some D&D material, it's hard for me to tell sometimes if something happening in my neck of the woods is happening elsewhere. (Especially since local RPG groups can really skew it - a successful campaign of TORG at Glasgow Uni's gaming soceity means its possibhly selling much hotter hear than it is anywhere else.
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It sounds like online retailers may have had a clearout but local game stores did not, and for the most part products are being sold pretty much as they were before. (Certainly, no-one is saying anything like "My game shop has all the 3.X MMs at $5")
My LGS hasn't discounted books, even old shelf worn coppies that have been mangled by having bodies of 40k players playing at the too nearby table press against them. But then, I rarely have seen tempting discounts on backstock from them. (shrug)
Of my two LGSes, one of them does have occasional discounts. Just in the last month or two they had some 50% discounted Mutants & Masterminds books, and earlier in the year they had a big clearout where I got a bunch of stuff cheap (including Blue Rose for £5) The other, however, seems to pretty much keep things in forever - they have the Lawnmower Man & Men In Black RPGs on a wee quiet wall, as well as a copy of The Primal Order from way back when.
They don't have a lot of other 3.5E books, apart from Paizo products, all of which are recent releases.
There does seem to be a little less D20 product in the standard bins of one of my shops - though it's still a bigish chunk, and far more is in the second hand area.
I wonder if some shops are reluctant to discount ands ell it cheap because they still don't have enough material to fill that void - with fewer people picking up the GSL at the start than the D20/OGL, and still a smallish selection of products for 4E, perhaps they're still seeing 3.5 books as a major chunk of their RPG section.
It's come up before in most of the threads about why LGS's are dying. Too things really;
1) Cash flow/ store space: by ditching at a discount, you're getting some money to spend on next months stuff, and some space to put it in.
2) What a guy I know termed "first loss", from car dealers. It's better to discount 10% after 1 month instead of 50% after a year.
I read this in a few threads about FLGS management, and I can see why it's a problem and why FLGS managers make the "wrong" decision. With small margins at the best of times, they seem loathe to take a dent rather than wait for that "perfect" sale.
Speaking from my own experience, though, if I'm already playing a game and I don't get a supplement on release I'm unlikely to pick it up at all. I think more game shops should be considering discounts sometime around 1-3 months after a product is released to try and tempt players - in all my time at these two shops I can only think of one product where this happened, and it did lead to me buying something I was swithering on.
At my local used book stores, they were each flooded with 3.5 books right after Christmas.
However, if you're looking for 3.5 books for under 1/2 off, you may have missed the boat on that one.
See, the thing is, I've been going pretty constantly to my game shops (one of which has a hefty second hand selection) and not really seen much of this. Whatever second hand books turned up were either 3.0, campaign-specific or unremarkable 3rd party books. I have turned up some gems but, for the most part, it doesn't seem like the boat reached my neck of the woods at all.
I wonder if part of the problem is the kind of books I'm after - I've got a pretty broad selection of books, most of my missing ones being the Complete Series and the Racial books. I also wonder if some retailers are waiting until Pathfinder comes out properly to really see what the 3.X support is like, and if a lot of people are still only dipping their toes into 4E rather than abandoning the previous edition wholeheartedly...
