At the moment, this feels very much like a self-fulfilling prophecy. "Well, sales are down" or "Sales are such a small percentage of revenue"... that they question keeping the product line around. Given that there haven't been any major updates, yes, sales are down.

I suspect if they hadn't put out a new model of the iPhone since the 3GS, sales of the iPhone would probably decline over the last 2-3 years.