After a few years with a G10 and G12, used primarily for street photography, I tried the G1X and didn't like it as much for street use. Even though the larger sensor captures a terrific amount of detail, other aspects of the camera made it less appealing than my G12, at least for my intended use. So I am back to using the G12 but just itching to try something new out in the street. Then the Fuji X100 gets a firmware update that fixes many of its problems, they introduce a new X100S, pushing the used X100 price down a bit (to G1X prices), I grab one used from a forum and maybe I have found what I'm looking for in a street photography camera. It doesn't have many of the G's features, but I set up the G12 with manual hyperfocal settings and left it at the widest zoom most of the time anyway. No way the G's IQ or low light performance will come close to the Fuji.
So what I am saying is that Canon hasn't evolved the G series fast enough or improved the IQ or (especially) the low light/high ISO noise issues to keep the G competitive or innovative for many photographers. In addition, Canon now offers the S series compact p&s line, and excepting the hot shoe (important to me), you get most of the G series' "specialness" in a smaller, totally pocketable camera. The EOS-M is a different beast entirely, but it ought to provide the higher-end quality that G users may have been hoping to see in the next G.
So on both ends, the G series has been squeezed into a tiny niche, mostly by Canon themselves,and I am guessing that photographers are looking to other cameras for the functionality and convenience and IQ that was previously available ONLY from the once-innovative G series.