I think Delphi simply needs a plan. I mean: Borland - Inprise - Borland - We're going to sell! - No, sorry, we're not going to sell, it's CodeGear now - Ok, we ARE selling, it's Embracadero now. That did not really help building confidence...
Then, they seem to do too much with too little manpower, and the result are products like Delphi 8. Oh yes, they were people who actually built stuff with it, but that does not change the fact that it was really bad, sorry guys. The new IDE (I think it was called Galileo) took until Delphi 2006 to actually be usable, but at that point they already lost a lot of reputation due to two less than stellar versions (D8 and D2005).
Then, they did leave out Win32 too long. Unicode VCL? Bah, just use the shiny new .net! Now, if their .net implementation would not be soo far behind Microsoft that would may be work, but with a Win32 Delphi that starts to age and a .net Delphi that is 2 years behind Visual Studio, I did not really have the opinion that the guys had a clue what they want to do.
I do not want to sound too harsh though, the Delphi Guys were quite open and available in the newsgroups, and they did not really try to hide the fact that it was Borland Management who is to blame here, but as a customer that does not matter to me.
So basically, a period of bad, old and overpriced products really cost them.
I think they are now moving strong again. They seem to be under the hood of a company who actually cares now, they are start making more interesting Products again (to my knowledge, Delphi 2007 has a good Vista Support, working AJAX and Delphi 2009 FINALLY adds Unicode, even though I did not try and use them). Blackfish SQL looks really interesting as well.
I think they still need a bit more polish, a clearer road map, re-think the pricing. Compared to the Visual Studio Professional Pricetag of 899 €, Delphi is not really competitively priced, and the full Developer Studio is even less so.
The Delphi Language is still quite attractive in my opinion, so I would be sad to see them go down, but in the last years, Delphi reminded me of the Amiga, with all the positive and negative thoughts associated with that.