I think we are.
The site scope was changed dramatically from its original proposal, without the consent of the Programmers community, which drove many users away. Since then, strict enforcement of keeping questions on-topic with the new site scope, combined with the fact our site name doesn't match the FAQ has been causing a lot of users to misunderstand what the site is meant for, and to lose interest and stop asking/answering questions.
For example, here's a graph of our new user growth. It remains fairly steady, because many programmers are interested in a site for programmers:
And here's a graph of new questions asked. It is going down hill fairly steadily for a while now, and I don't believe it's because all the good questions have been asked/answered. I think it's instead people being aware of stricter rules, and/or being uncertain about if they should post something for fear of just getting downvoted and closed.
It should be noted that the above graph shows posts which were closed as of 5/10/12 (which is when I noticed I was including answers in my old graph). To view a graph of actual open/close post history, use this query, which was added in May. It should also be noted that some of the larger spikes of posts getting closed can be attributed to the massive cleanup that some users undertook.
Our number of votes is also declining, which is the result of less user participation.
I can't speak for others, but personally I've gotten frustrated with the way our site is going and have kind of given up. I don't think I'm alone either judging by questions on meta, and the disappearance of several formerly-active users.
This site is yours, so you can run it however you want, however I strongly believe that the downward nature of the graphs is caused by a lot of misunderstanding and confusion about the site scope, and the way SE treated the Programmers community when they decided to change the site scope without their consent.
The site was meant to be a site for programmers about programmers, and it has since changed to a site for programmers about software development only. A lot of old active users have lost interest, and a lot of new users don't understand the site scope and ask low quality questions.