"So long as there are new users signing up for these services they will most likely lean toward Tumblr as the larger community is enough reason for them to go that route."
Geocities and LiveJournal are two sites that had pretty meteoric growth at some point. Plenty of social networks (Orkut, MySpace) looked pretty shiny at one point, too. Every company slows down-- otherwise upstart startups wouldn't be able to beat incumbents.
Very true, but the examples you cited also involved long-time users abandoning those services. The author was careful to note a plateau, not a downward spiral.
Would I argue against Tumblr eventually hitting a downward spiral (negative growth)? Certainly not. I think that is more likely to happen before it sees no growth (positive or negative).
Additional edit: Mind you, I have no statistical evidence to support these claims. These are purely some thoughts that I have, and, quite frankly, I wouldn't mind being proven wrong.
Geocities and LiveJournal are two sites that had pretty meteoric growth at some point. Plenty of social networks (Orkut, MySpace) looked pretty shiny at one point, too. Every company slows down-- otherwise upstart startups wouldn't be able to beat incumbents.