I saw this posted on the CU forums, a very interesting article analyzing the factors that killed the internet auction, and pertinent to this thread. I will admit that they do name sniping as a factor, and I will admit I was wrong in dismissing it so much. Anyways, here's the link:
http://www.wired.com/magazine/2011/05/ff_endofauction/
Really, though, the biggest factor in the decline of the auction may simply be that the novelty of bidding wore off. “The Internet stopped being a source of wonder and became a place to do certain kinds of business,” Koehn says. “Once that happens, you start to think about things like ‘Does it make sense to spend this much time on an auction when I might not even get the item in the end?’” In econospeak, the hedonic benefits of bidding on eBay diminished.