Well, as I said a few days ago, I don't think so. This BBC article (or rather, blog) reckons it is. But surely SL is simply going through the downturn of Gartner´s Hype Cycle and heading towards the Tolkein sounding 'trough of disillusionment', right?
(Image is from Wikipedia by the way).
It was, is, to me, pretty obvious that SL can't have peaked if most people still don't know what it is and those who do, on the most part, have never been online.
SL itself is unlikely to be the virtual world we all participate in in the long-term, but if they manage to sort out open-id log-ins and avatars that we can take from one world to the other, then there won't be any need to only reside in one virtual world, we will be able to hop around, as we do in life. We go to one type of bar with certain friends, another with colleagues, the theatre or the football with other groups of people... it's nonsense to think we'll be restriciting ourselves to one environment (regardless of how rich that is) in the virtual world.
But - as with all these things - when is the best time to jump in to these worlds and get virtually wet? Perhaps dabbling now is good, to get the experience and be an 'advanced user' before everyone's grandparents sign-up?
That is if you want to make a difference, to use it for business or education etc. Otherwise, I guess it doesn't matter. Just avoid it until you find you can only do your Tescos shopping in SL and not on the normal internet... then you'll sign-up quickly...