There are always good and bad shows per season. There are always disappointments and pleasant surprises each time. The quality varies each season, but in general the downward trend is a mere illusion.

People tend to clump together all the great shows they have watched as "old" anime, and usually forget that those don't belong to one season. Most of the time, the masterpieces are seasons apart. This grouping makes people think that each new season is lacking quality, when in fact the seasons where the greats were aired probably also had a similar average quality across all the shows aired.

I still add shows to the masterpiece and excellent lists of my anime archive, so I am quite sure there is no general quality decline. In fact, some of the best shows I have seen aired in the past few years.

I also agree with Kraco's point that saturation deteriorates the overall experience. I should know, having watched way too much anime for my own good (click my sig if in doubt). I can pretty much predict what will happen for 90% of the shows I am currently watching, which is why I don't post nearly as much in the anime threads as before.