There's a lot of theories about the death of adventure games. One which I subscribe to is that they sell no different than they used to, it's just that the overall market for computer games has become a lot bigger.
I agree with Klytos on that one. 20 years ago, not every household had a computer, let alone two or three. Most of the people at my college had to use the university computer lab for various projects (writing programs, typing/printing research/compostition papers, graphing data from lab experiments). More computers = more computer users = a more diverse group of (potential) gamers.
Tying in to that idea: seems like I read a rather snobby article over the last few years claiming that the folks who initially had home computers were more of the "elitist" / "intelligent" types who enjoyed reading and more "high-brow" / cerebral entertainment. As more and more people became computer users, the market began drifting away from the thinking man's games and left the adventure genre far behind... Not sure if I subscribe to such a harsh interpretation, but there may be a kernel of truth to it.
And don't forget about technology: the advancement of sound and graphics were things other game genres took advantage to their great success, like first-person shooters. These technological advances, however, didn't necessarily help make the adventure games any more enticing or exciting, since graphic adventures -- the natural outgrowth of text-only adventures -- still relied on the basics of captivating story-telling and puzzles.