Cartoon Network will only appear as a fallen network to those who grew up watching it back in the 90's to around 2005-07 and a big reason for that is the "nostalgic factor." Otherwise, it's still thriving on its own with the new aged kids that watch it today.
I'll admit, I certainly don't watch Cartoon Network as much as I used to, but that also applies to many of the other channels targeted at kids and young teens today like Disney Channel and Nickelodeon. It's not because I think their shows don't compare to the shows I grew up watching (although, to an extent this is true), but because I've grown up; I've grown to like things that are more suitable for my age group today.
I still tune in for some of Cartoon Network's new shows today though (Green Lantern, Young Justice, Riders: Dragons of Berk, Adventure Time, Regular Show, and their Cartoon Planet block). All of which I think are good shows and suitable for ages above CN's actual target audience.
So, no, I don't believe Cartoon Network has fallen into a hole it can't get out of, but I certainly do believe they can be better.