His competition is stronger now then it was at that time. If he declined he would not be able to win this much. I have seen improvements to his game. I have not seen things that are worse.
Then you don't see very well I'm afraid.
Areas where Fed has declined: Sharpness of movement (especially visible in his loss of his vintage inside-out forehand, and in his defense to offense transition), block return, passing shots, running forehand, rally forehand (weaker than it was), motivation.
Areas where Fed has improved: Experience, tactics (slightly).
Also, Fed's competition in his prime was actually pretty darn good. His rivals were not as consistent perhaps, but there was easily better depth back then than now (exhibit A: Old Ferrer chilling around at number 4, lol).
There are two main reasons as to why Roger is still #2:
1) The current era doesn't have much depth as mentioned.
2) He is an exceptional talent and can still produce great tennis.
There is however no doubt that he has declined.