Completely stagnated. In another great quote from Alan Kay he says, "Java and C++ make you think that the new ideas are like the old ones. Java is the most distressing thing to hit computing since MS-DOS."
I think it was the demand/money. Once the PC revolution hit, there was so much to do just to automate current processes that we got lost in the workload. It doesn't help that our industry is both woefully ignorant of its past and horribly dogmatic about its present.
That said, there are some very good people currently working in this space -- looking for the "pink plane". I'm very optimistic about this area actually.