There sure are people making enough money to live of selling themes and templates. I myself created a couple of WP themes almost two years ago and can still live from the revenue. I am however enrolled in university so my costs are significantly lower than they would be as a regular freelancer. The costs of living are always relative as to where you are in your life, your lifestyle and of course where you live. Someone living in a country where the dollar is much stronger than the local currency has a big advantage. What is also often forgotten about are taxes and insurance. You always have to have a little something saved up if a problem should arise.

If you have a solid code base, a few creative ideas and good graphic skills you can still make quite a bit of money. Of course it is always important to find a niche in the market that is not as over-saturated as others. But that basically applies to any other business.