I wouldn't say that they are on the way out but, increasingly, booked guests and floor singers/musicians or sessions don't tend to mix very well. At least, not in our neck of the woods(Edinburgh and South Scotland generally)

There is now also a tendency for many performers to appear in small concert venues, arts centres, and so on rather than folk clubs. Some will even organise their own gigs and tours booking local function rooms, village halls and so on. This sort of arrangement can still be quite intimate but, of course, restricts the opportunities for aspiring and local musicians and singers to have a go.

The two main folk clubs in Edinburgh(EFC and Leith), apart from very occasional special nights, always run on the basis of having a paid or booked guest or band. There is usually a pre-arranged support spot which will feature either reliable local singers/musicians or an aspiring emerging artist or outfit seeking exposure. As you might expect, the quality varies greatly from night to night.
EFC still has occasional floor spots but these are usually "tried and tested" or recommended/known. There's no guarantee of "just turning up" and getting to play. The third city club "Wee Folk Club" still allows the odd floor spot or two but it is still guest oriented and, again, there is no guarantee of getting to sing or play.

The rural clubs in the area(Plus The World's Room in Edinburgh which claims to be a club too) are run somewhat differently and features mainly floor singers, spots etc plus occasional guests. Generally, these are favoured by singers as most tunesters prefer pub sessions of which there are many in the area.

In the latter type of club, the guest artist nights are often regarded as an inconvenience by the regulars who would rather just do their own turn. In my experience, even other floor singers and musicians are regarded as an inconvenience by some attendees as they'd rather have the limelight for themselves!

It's also the case that there are now so many amateur musicians and singers going around especially that it now seems acceptable to sing or play from pieces of paper and also because of all these classes and courses etc. Naturally, they want an opportunity to show off what they have learned.
So, many take the view that, unless a guest artist is exceptional, why spend good money to see someone who is only maginally better than themselves? Of course, in most cases, they are giving their minds a treat but it's natural to wish to be selective just the same.