An alernative hypothesis is that etsy was a predominently female community that (kind of conjecture) used to have a comminty driven social aspect. As it became more of a market place, and less of about discovery and community, most of those people moved to the "better version" of etsy.
Now, pinterest is the best of both worlds, a place full of like minded people driven by discovery of cool things (what etsy was) and the marketplace is like central.
I suppose gender doesn't matter, but it is worth mentioning these sites have a greater population of women and most of the products I have seen are jewelry, clothing or crafts that are made by women and likely bought by their peers.
I suspect, that as it became less trendy and creative, and more of a store, most of the top people left and went to pinterest. When a community has a their top talent leave, and their competitors are more in line with their customers expectations, then thay community is through.
Pinterest isnt something I use, but I have seen some cool designs and for discovery of certain things, it seems great.
Tl; dr, as an outsider, i think thar pinterest out etsy'd etsy