Sony has been pretty hard done by ever since the release of the 60GB. The reason the 60GB was pulled was due to lack of funds and therefore they had to make a model which was cheaper to mass produce, and put a price tag on it which was a little more affordable for people. Gaming is an industry of phases - a bit like the movie industry in the sense that there are different games out at different times, different trends which occur as people's gaming desires change and tweak. The recession hasn't helped Sony, but they were struggling years before this. I don't think the PS3 is dead, the PS3 will continue to be a leading console for years to come until the PS4 comes along.
One thing you have to remember is that the Wii and DS have allowed a new industry to form for non-gamers or casual gamers who want to have fun and relax rather than have WW2 take place in their living room which creates a lot of screaming and shouting. This doesn't mean the Wii and DS will always be more popular, after all Nintendo have lost a lot of fans due to their (in my opinion) amazingly terrible and cheesy games - but yeah some people like it so I can't knock it. There are two different markets now - serious gaming and casual gaming - to put it in extremely simple terms. So with this in mind, the PS3 isn't dead, just incredibly quiet.