Absolutely not.
If you'd asked this, say, 5-10 years ago, I would have unquestionably said fantasy novels had taken a nosedive. If not since 1974, certainly since the late 70s, when the D&D influence really started to be felt.
In the wake of D&D (and, almost certainly more importantly, the widespread popularity of the Lord of the Rings), fantasy adopted a forumla that was followed by 99% of the scholck that clogged the '80s and '90s. The quality didn't rise but the themes (among those who 'got' that the source material had a theme) changed and the style (among those who had anything approaching it) became wordy and overwritten. The vitality of the previous pulp fantasy vanished and was replaced with dull LotR clones from writers who weren't half the prose stylists or plotters Professor Tolkien was - and neither style nor plot were Tolkien's greatest strengths in the first place. True, the pulp writers who preceded them weren't half the plotters or stylists Robert E. Howard was, but they were pale imitations in the areas that were Howard's strengths, and their third-rate schlock was higher on the literary totem pole than the fourth-rate tripe that replaced them.
Now, in the last 5-10 years, fantasy has *finally* recovered some of its verve and variety. Writers like Martin, Neil Gaiman and Sussanah Clarke (Jonathan Strange and Mr. Norrell) have pushed the genre again, and obviously the Harry Potter series have blown the doors off in terms of sales.
If anything, I'd say the *slump* in D&D surrounding TSR's demise helped the quality of fantasy fiction jump through the roof.