Amazon is still king in the ecommerce part of affiliate marketing but I don't think amazon is the best option for marketers anymore. With only a 15% commission on items and so much competition from other internet markets I think other routes are better such as cpa, or other affiliate companies would be best. That said if your going to work with amazon I would suggest doing kindle since its new and the books you create you keep the rights to forever. The books will rank on amazon and keep bring in money month after month with no work.
No, Amazon is not losing its charm. Revenue stream fluctuates because of several factors, such as innovation and experimentation but things get back to normal. It is a multi billion dollar company and they won't be losing it easily.