If you were to ask my honest opinion (but you're asking the general TZ public,so...) I'd say it isn't dead.But a dying breed.There is hope for Disney as the esteemed Lasseter is making plans for a traditional animation revival with the hopeful-hit which will be The Frog Princess in 2009 and then he choose Phineas and Ferb over a Chicken Little series,so,yeah.Hand drawn isn't done quite yet.
As for the other currently popular animation format,with the exception of FHFIF and a few others,Flash is trash.To me anyway,others might not think so.But it's just a cheep way of making money and unless it has good storylines,pfft...:shrug: