I think there are several factors involved in the decline of PC gaming. One of them they mentioned, the constant upgrading of your pc to play the next game, memory, video cards, motherboards, cpu's... it gets expensive and tiresome. Also when was the last time you bought a PC game and didnt have to immediately download a patch to fix something or search for drivers to upgrade your system to solve issues?
And another thing is playablility, there just nothing really out there thats all that different from the games you played last year or the year before. The only thing that changes is better graphics, more levels, now has multiplayer online.... Half-Life 2 was the last game I played that I really enjoyed.. and C&C 3 I liked but I like real time strategy games and I like the interface with the game, otherwise its no different than the other C&C games that came before.
And finally, Money. I'm paying more for gas, food, utilities than I was two years ago, that eats into my game buying funds. When I do get a game I search for used or bargin shop. I just do not see a need to rush out and buy the next game for $50-60 when I can wait 6 months and get it for $30-40 or a year and get it for even less