Well, there are a few things to keep in mind with respect to the question of this thread.
(1.) The PHB book simply has not arrived at most gamestores yet. The books are still working their way through the distribution system.
(2.) It will probably never arrive at some gamestores for the simple fact that, based on last year's sales, many gamestores are reluctant to stock new d20 3rd-party material -- despite the fact that C&C is
not a d20 game (many gamestore owners simply do not know this).
(3.) Some of the main support material for C&C has yet to be published: e.g. the Monsters and Treasures book, and the first installment of Castle Zagyg (the original Castle Greyhawk). (As DaveMage indicated, the game might receive a boost once people see that the original Greyhawk dungeon campaign has finally been published, and it uses C&C).
It will be too bad if (2.) is significant enough to undermine C&C's chances, as that is a factor that has nothing to do with the quality of the game itself. :\
Here is another important thing to keep in mind when assessing the extent to which C&C is 'catching on':
C&C is a
niche game. It will appeal only to players who want a 'rules light' system (e.g. no feats, skills, attacks of opportunity, etc., though they can be added as options) and/or a game with an 'old school' feel (e.g. clear and definite class 'archetypes'; no half-illithid PCs with uber-prestige classes, etc.). Consequently, it will
not 'rival' 3.5 D&D -- not even close. At best, it will occupy a position alongside, say, the Conan RPG in terms of popularity -- an 'alternative' game for those who want a FRPG other than 3.x D&D.
Having said all that, C&C does have a few things going for it that make me cautiously optimistic that it will succeed in its particular market niche:
(a.) A considerable amount of upcoming support material (the Castle Zagyg series from EGG; a number of other 'old school' modules; a fantasy adventure magazine in the style of the early Dragon called 'the Crusader' [the first issue has articles by Darlene of Greyhawk map fame, Rob Kuntz, and others]; and possible C&C versions of Goodman Games' "Dungeon Crawl" modules).
(b.) Broad compatibility with ALL editions of D&D. I would say that C&C is, roughly, 90-95 percent compatible with pre-3e material (you can 'convert on the fly' by changing the ACs only); and 75 percent compatible with 3e material (you can usually 'convert on the fly', but certain multiclass combinations or feat abilities may require some thought, and higher level adventures and monsters will need to be 'toned down' somewhat).
(c.) Good art -- the cover for the PHB is quite attractive and striking. (I actually think that this is an important factor in getting casual consumers to open the book and look at it. In addition, players tend to have more positive feelings with respect to products that they fine aesthetically pleasing.) Moreover, art that is quite distinctive -- definitely not like WotC's predominant style.
(d.) A devoted core of 'grognard fans' over at places like Dragonsfoot that seem eager to support and proselytize the system. (This not a big factor, of course, but it certainly cannot hurt a game to have a devoted core group of supporters in place even before the game has been published).
In short, I think it is too early to tell whether C&C is 'caching on'. Moreovoer, I also think that we have to have appropriately modest expectations as to what 'catching on' would constitute for C&C (namely, establishing itself in a particular market niche, not rivalling 3E). Finally, I am cautiously optimistic that C&C will in fact 'catch on' and establish itself as the preferred system for a particular segment of the market.
