I can't add much more than what many others here have said: it's really viewer interest that has declined, not the show's quality. I haven't watched much beyond whatever seasons include Generation III, but what I have seen is like looking at a brick wall to see which bricks stand out more. Each episode is essentially more of the same:
- Ash and friends meet someone who's lost all hope/is a hopeless case/is a moron/just someone who needs moral correcting
- Ash and friends help them/help the people the new person in question is going to hurt
- Ash sheds a few tears and proves the power of friendship can overcome anything (wait, is that Tea from Yu-Gi-Oh?)
- The person who's lost all hope/is a hopeless case/is a moron/just someone who needs moral correcting learns the error of their ways/is shown up by Ash
- Ash and friends depart and head for the next Character of the Day, promising they'll return someday (they never do)
I haven't watched any of the new episodes, but does that just about sum them up?
I actually welcome things like character design changes and mental maturation, as that helps a series from growing stale. The Pokemon anime had no choice but to grow stale anyway because each episode looked increasingly familiar.
Still, it's probably entertaining a new generation of viewers, so I doubt it's going to falter anytime soon. Even if they lose interest (and they probably will), another generation will rise up and take their place.