On the contrary...I think 1/700 is thriving.
Let's look at the new kits that have come out recently in 1/350, say, the last six months.
Trumpeter USS Franklin
Trumpeter Lexington
Trumpeter North Carolina
Hasegawa Mikasa
Let's look at what's come out in 1/700 in the last six months...
Aoshima Bismarck
Trumpeter Bismarck
Dragon Bismarck
Dragon Admiral Ushakov
Dragon Essex
Dragon Randolph
Dragon Lexington CV-16 (just announced today)
Trumpeter Lexington CV-2
Trumpeter USS Blue Ridge
Trumpeter USS Mt. Whitney
Trumpeter USS Baltimore
Midship Models USS Cleveland
Midship Models USS Miami
This doesn't include anything done in resin...of course, there's probably alot more I've missed, including re-issues.
1/700 is still very popular for several reasons, price point, and size. Yes, as we get older, it's harder to work on the little models, but that's offset by the reluctance to jump into a more costly, and time-consuming, 1/350 scale kit.
Jeff