Does it really matter that mass-produced steel may have seen its day?
There are other materials that are more economically viable in today's cost-conscious, heavily-automated world of of mass-production bicycles.
What matters is that steel is still viable in the world that we are interested in: lower to low production, hand-crafted bicycles. In my opinion, there has never been a greater selection of quality steel machines available. Plus it seems that there is significant demand and interest (which the mass-producers do pay attention to) in steel that is driving both the craft-builders as well as the mass-producers to continue to use it as a material.
If you would like to see examples of what is available in off-topic, steel choices today, my suggestion is to visit your smaller LBSs that may not have access to the major lines like Specialized, Cannondale, Trek, etc. for whatever reason. It seems that many of these smaller shops cater to the commuters, fixed-gear crowd, etc. and carry "alternative" brands to the BIG 3. I think that you would be amazed by the number of new steel options that are out there.
I have a modern 4130 steel machine that is WAY off-topic in more ways than one and absolutely love it. It is Chinese made, delivered at a very aggressive price point, and receives incredible reviews against its peers.
So...steel may be down, but it is definitely not out!
Mike Spess
Austin, Texas
USA (until we secede) :)