I haven't found D2 dying at all, some of my friend have moved on to WC3:FT but still there is nothing like getting together and playing a joke round of low-level dualing or bannign together and beat the game from scratch. But about the D3 comment, I am not sure if they will do it. Maybe. I meant the do have to worry about some of their old original creators of the game coming out with their (what some call the spiritual squeal to D2) "Guild Wars". But alas, time will tell.
Blizz are the SLOWEST game makers i've EVER seen. Look at the delay between each game. Either they do it get the game popular and wait till everyone has their game and then make a new one to maximize the profit. WoW just got out, i doubt they'll punch out D3 untill they make enough money with WoW.
I think they are going to be working on WoW for a while, since it makes them money. Yes, a new diablo game would make them tons of money. But it might take some away from WoW, so they will prolly wait til WoW dies down a bit.