I personally absolutely adore shmups even though I'm not that great at them, and I even work with an indie crew on one or two of them. (
SHAMELESS SELF PROMOTION LOLZ 
) Shmups are far from dead, aside from the obvious Touhou fanaticism, there's a lot of cool developers doing them still. Cave is the most obvious example, and also by far the best. Treasure also still makes them, and there are certainly others. It's still a vibrant genre in Japan as you would expect... somehow.
The
indie shmup scene is very much into these kinda "modern-classic" top down shooters, more along the lines of Geowars than Progear. I think that's kind of a shame, because I like pixel art and 90s cocksure synthy game music. But there are a lot of gems there, too.
Anyway at the latest Comiket there was an incredible new release called
Trouble Witches. This is a very professional-looking game, even featuring voice acting and everything, and it's not just a bullet hell shooter. I really love this game. <3
Jam it back in, in the dark.