The community is pretty much dead though...
I've read the same statement on a regular basis for the past 4 years... yet I don't see less devs on the scene. They are not the same devs as 4 years ago, but I think that's exactly the definition of a lively scene: new faces on a regular basis.
It was probably more exciting at that time (2005/2006) for people who were into "pure" hacking, but now thanks to the work accomplished years ago, the homebrew community is more mature and we get more and more quality homebrew IMO.
There's probably less innovation, that's true, but I think that's because most parts have been unlocked now.
Also, for the many people who believe that PSP hackers were better in 2005/2006 than the ones we have now, you should see how much the security has increased on this beast. Syscall randomization is what's been hammering the development of HBL for example...the PSP didn't have that in the N00bz times...
Basically, somebody who wants to hack new firmwares pretty much needs to know at least as much as what previous hackers knew, before they even get a chance.
Think of how much the PSP scene used to rely on game exploits: GTA, Lumines, Gripshift... people used to jump out of joy when those were announced. Now when someone announces a game exploit, they almost get insulted, because the Go made the concept of a game exploit almost void...
My point being that hacking the PSP nowadays requires a much higher "entry level" than it used to, which might explain why we have less hackers. (Not from the end user's point of view, of course, I mean, how hard is it to copy a few files on the memory stick...)