Dave Wallens asks this question in the current edition of GRM. He correctly note that the people who were into the scene have grown up. While that is true, there are other factors.
One factor was mentioned a few weeks ago on another thread. The thread mentioned that cars of the late 80s and early 90s may have been the best cars for enthusiasts as they had the right mix of technology and simplicity. I.E. Fuel injection without OBD II and lighter weight.
Another factor is that as these enthusiasts matured the came realize that many of their mods were pointless or counterproductive. Once the news got out the scene began to wither.
As for Dave's observation that the number of ST cars has fallen. I have experienced the same. In my SCCA region (NEPA) it was not uncommon to see fields of 10 or 15 cars at our regional events of 40 cars. Now we are lucky to have five ST cars and maybe two or three STS cars. Street Mod however has exploded as every 20 to 25 year old have apparently found ways to afford new or slightly used WRX's, STI's and Evos. This past weekend saw two Neon's, two Civics, an Omni GLH, a Daytona C/S and a four-door Cobalt make up the entire front-wheel-drive contingent this past Sunday. Only the Civics and the Omni ran in ST.
Enthusiasts have definitely gone upscale. We had, I think, four 3-series and a 1-series. We had more Subies than I can remember (probably about 8) and two evos. Three Mustangs, two C5 Vettes and a Factory Five rounded out the field.
Think about it. What fun, light and affordable compacts are available that can be modded cheaply to performance levels achieved 10 or 15 years ago. Today's cars are heavier and option laden. If that is de rigeur enthusiasts will by larger, more powerful cars which can deliver acceptable performance with all the weight and gadgetry.
Why not simply buy old Hondas, VWs and old mini Mopars? Try to find rust free and unhacked examples in some parts of the country. The after market is also beginning to dry up. Without new hot hatches (or similar) the sport compact scene could be dead.