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If you're talking sales-wise, then yes I guess you'd have a point. The overall climate of the CD market together with the rise of other female singers (strangely enough there are so many from within Avex!) have contributed greatly.
However, if you're trying to speak from a musical point, I wouldn't think that she would be experiencing a downfall. Personally I prefer her later albums (MY STORY and now (miss)understood) more compared to I am and LOVEppears. It seems that these days Ayu is more willing to experiment with many different styles of music comapred to what she had done previously before RAINBOW. As a result, we now have musically diverse albums like (m)u.
I think the real downfall would have occurred had she not decided to freshen up and re-invent her music.
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