Well, I do believe Rock is still there - even if most of today's Rock bands don't exactly meet my musical taste lol.
I mean, there's a ton of bands out there who still play handmade Rock, and in recent years, there even has surfaced one or the other metal band to mainstream attention. However, of course even though they play "Rock", those bands which get more airplay and mainstream media attention are necessarily always those who are thought to be easier accessible by the regular consumer - which will not always be the truly "best" bands (but that in itself is a very subjective matter).
However if we're talking Rock - the genre itself has never died. Many of the bands you mentioned in the first post are actually still (or again) active today. I mean, AC/DC are about to release their new album this fall, Led Zepplin have just had a huge reunion, Uriah Heep, Deep Purple or Queen are also still doing their thing... They are all still there - just not in the "charts" or any mainstream position anymore. Naturally, that is because the taste of the time changes. The classic, hammond organ driven Rock of the 70ies that bands like Purple or Heep played just doesn't work with today's audience, it seems too old fashioned... Progressive stuff like Pink Floyd or Procol Harum simply requires too much attention and work on behalf of the listener to be accessible for the majority of radio/MTV consumers... Metal Bands are probably too "loud" and out of the ordinary stuff people are used to for most (even if there are always one or two bands out there nowadays as I've pointed out, like Metallica, or Nightwish, or Bullet for my Valentine)... but with the attention span of the average listener, you mostly can use stuff on radio that can be played decently in the background. Not too fast, not too hard in its sound, maybe something people can dance to in case you want it played when people go out... And Rock (especially the more "challenging" songs that go beyond the Bon Jovi / Nickelback songwriting style) is just not that suitable for that.
I think the quality of the music that is out there has not declined - there are still tons of great bands and musicians in all genres out there. If anything, the market has only grown and grown ever since the 70ies and 80ies. Back then, only the "cream of the crop" that really worked were able to capture a record deal, and record their stuff in professional studios. Nowadays, pretty much everyone can make music of pretty much any genre at home with their PCs... so there is a wealth of choice out there - some of which is good, much of which is crap - but definitely more than ever before. However, I believe in terms of mainstream music, the big record companies are of course working towards producing those types of music that will sell, and sell big. At the same time they keep their costs at a minimum, taking little risks with numerous casting stars already made popular by TV shows, casting boybands that are calculated teenage-girl-heartbreakers, and generally furthering types of music that just don't cost much money - generally music that will be less good, simply because people didn't invest much in it - neither time, nor money, nor creativity. For all that would cost money, but will work due to the basic laws of harmony and song structure - and we just don't want to spend more than we absolutely need to, right?
So all those developments, from the late 80ies onward, especially over the boyband and crappy dance-music culture of the 90ies, to HipHop that can be produced with minimal sound characteristics (a beat, a few harmonies for the background, and some singer) in our day and age; all those developments have watered down the quality in mainstream music more and more. Of course, ever once in awhile you will get a band or a singer who is exceptionally talented, and who can write great songs themselves. But for every one of those, you get 20 cast-acts and artificially produced and manufactured plastic pop/rock acts that have no heart and no soul in their music, modeled after a certain scheme, and simply work because they play music that follows a very simplistic rule, and that is designed only to appeal to broad masses who really do not want to or simply cannot spend too much time actually thinking about music or consciously experiencing it; but instead just want some short-term entertainment or distraction at little challenge for themselves.
Aite, I just realize that from an intended "simple and short answer", I've once again gone off on a rant about the evil that men do... lol... Sorry about that.
In any case: Good music is still out there. You just have to look for it in the right places.
