If anything I am seeing more and more people wanting to learn to play recently.
Teaching contemporary instruments is something a good drummer friend of mine is very passionate about, so much so that he started a UK wide network of guitar, bass, keyboard and drum tutors (http://www.gigajam.com if your interested).
He seems to be doing well for himself with his lesson content being sold into primary and secondary schools as well as a growing network of personal tutors.
I think basically guitar based music will always excite children, it's very hands on and has much less of a stigma attached to it that traditional classical instruments and music.
You only need see some of these kids partaking in the Gigajam demonstations I've seen to know that the guitar etc ain't becoming a thing of the past, by no means!
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