joysticks never went away, and neither did the space sims. if you really look hard enough you can find both. there was a period joysticks kinda went backwards though. when usb made the gameport obsolete. because of the complexity of the usb bus the joysticks now needed their own brains (before this many joysticks were just pots, buttons, and wiring), so every joystick now needed a microcontroller. many of these mcus had 8 bit analog adcs, giving joysticks an 8 bit resolution. but some gameport joysticks (sidewinder) gave you 10, and many used the adcs on your sound card and gave you 16 bit resolution. these days you really need to get something semi high end just to reclaim that ancient glory. these days 10-bit is touted as a high end feature. also they used this as an excuse to up the price. "this is usb its better so you have to pay more". should point out that you can get a decent microcontroller with usb support for around 2 bucks, and thats not the bulk rate either. the cost of a good joystick is quite ridiculous and thats kind of why people avoid getting them.
right now the biggest threat to joysticks is micro$oft pushing the rather limited xinput (which only supports functions found in a stock xbox controller) over the far superior, but old and neglected direct input. im getting sick of buying pc games that support xbox360 controllers but not pc joysticks. for people who own top shelf joysticks, xinput is nothing but trouble. the real irony is that microsoft used make some of the best joysticks around. the one controller fits all mentality they seem to have is rather atrocious. im sure eventually they will pull their heads out of their ass and switch to an api that is actually better than whats currently available (and make it reverse compatible in the process).