From what I understand, the shine is rubbing off. The cost of housing is ludicrous, and companies are fleeing to places like Arizona. But you still can't throw a silicon wafer in Cupertino without hitting an Apple facility.
I think it's fair to say that Silicon Valley is dead. Cheap venture capital, minimal startup cost, access to university researchers, and good inter business communications fueled an engine which turned ideas into products. You can now find venture capital elsewhere, with the discount rate being what it is. The cost of housing and office space has spiraled out of control, thanks to the environmentalists and Prop 13. The trade secrets and intellectual property mania have pretty much destroyed open cooperation. The universities remain, but aren't the driving force they used to be.