I'd hardly call the current growth figures going the way of the LP

. As far as the rest going, PC gaming isn't nearly as expensive as you think, it just depends on the graphical level you are willing to settle for and of course your tastes. If all you care about are FPS games and you want to play them at the best possible settings, then, yes, it can be very expensive. But I mostly play godgames and adventures, and I just so happen to have a late 2006 adventure (Secret Files: Tunguska) beside me here, I'll list the minimum system specs:
Processor: Pentium III 500MHz
Video card: 16MB DX9 compatible
RAM: 128MB
Other: 2GB disk space, DX9 compatible sound card, DVD-ROM, Mouse
Of course godgames are quite a bit more demanding, so I'll take the prettiest out there (Anno 1701) and list those specs:
P4 2,2GHz
512MB RAM
64MB PS1.1 card (That's OLD if you must know)
3.5GB HDD space
4x DVD-ROM drive
And that's it

Anno 1701 on my >2 year old system btw:
http://xs216.xs.to/xs216/07251/screenshot0003.jpg
And yes, PC games do tend to be outsold by console games, you're absolutely right on that, and it is smaller than console gaming. It is however a growing market, and therefore absolutely not dying. And if you think lower sales are keeping games from the platform, I'll refer to this thread again:
http://www.neogaf.com/forum/showthread.php?t=167154