I'd add the "closed world"/"walled garden" nature of image-based Smalltalks as one more popular hypothesis. On the other hand I never heard the "too hard to learn" argument: highly regular and small syntax coupled with very interactive experience of ST browsers and other tools made it a joy for me to learn. I have only one complaint: as I learned Pharo I frequently tried to learn some interesting package but I couldn't find the "entry point" to it. It took me a long while to realize how to use Pharo's FileSystem library, just because it wasn't obvious what the external interface is supposed to be.

Anyway, Smalltalk still exists and not only as an inspiration for Ruby. Pharo and Squeak are very nice image-based environments, VisualWorks has "enterprise grade" support, GNU Smalltalk is small and lightweight and works well for scripts. There is Amber, which tries to recreate Smalltalk image inside the browser and there's (forgot the name) which tries to implement ST on JVM (it was on kickstarter I think). There's also Newspeak, which is highly experimental, and LivelyKernel (by Dan Ingals) which again transplants some of the more important ST ideas into the browser. And all that on top of mainstream languages gaining more and more features which Smalltalkers are used to. It's certainly an interesting time to be a part of Smalltalk community.