The demise is an opinion question. I did see the changing of the theme song has a huge turning point (and warning sign, heh).
Exactly. Demise is a harsh word. the changes that really messed around with the show, IMO:
- The passings of Jim Henson, Joe Raposo, Richard Hunt, as well as Jon Stone in a short ammount of time.
- The addition of Elmo's World in 98
- The addition of structural segments (which they seem to be taking down now) in season 33 or so.
That really seems like one of their experiments they tried that didn't seem to work. Personally, I really don't miss them at all. I don't know the reason they were added or the reason they were taken away, but it seems that when more regular muppets were added to the show, and recurring Muppet segments were developing, there was less room for humans doing sitcom-y type jokes like that. I do admit, from what I've seen of Buddy and Jim, it's kinda funny. But it almost seems like it should be in another show.A few changes from the first seven years:
First season: Buddy and Jim
Second season: replaced by Larry and Phyllis
Also: a bend put in the street, with the arbor area
Third season: replaced by Wally and Ralph (which was more similar to the first pair than the second pair.)
 
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 and the original quirky, random, and (initially) "Laugh-In" inspired show SS once was seemed to be turned into a structured, predictable, and not-so-quirky show. With all the PC-ness in SS now, I'm surprised the Bellhop segments are still airing since the bellhop gets maimed or hurt in some way in nearly every segment (except maybe # 20). That's not to say I don't love the Bellhop 'toons (and every other classic SS segment), I think they're great! 