I agree with this (UK boy's post) and also the problem of selling off playing fields. One of my friends is a PE teacher at a school nearby. There's no playing field and they have a square of concrete on which to do PE! Seeing as most people come into contact with athletics through schools, if this is your experience from 11 to 16 then no wonder people aren't getting into it. I think if the base of the pyramid (i.e. grass roots numbers) are low then it has a knock on effect.
Lifestyle is a big issue. However, I also think that things go in trends and cycles. It may be unrealistic to expect the UK to have 2-3 world beaters in the 800/1500 like we did in the 70s/80s. Everyone harps back to the good old days, but there are 200+ countries in the world, and being realistic it's actually unlikely we will be #1 in many events. Aside from this though, standards have slipped and it shouldn't be unreasonable to expect people to get near the times of the 70s and 80s. I do think Coe, Cram, Ovett etc were a fluke glut of good runners though.