Namecoin is certainly not 'dying'. In fact the development team has been very active, and activity has been picking up on the exchange. It seems to me that some people are getting nervous that all their money is in Bitcoins.

If you left all your money in Bitcoins, and walked away from a year and came back, there's a chance it could be worth 0. Not because governments made it illegal, or because more people were goxed... but because Namecoin has more features and simply made it obsolete in comparison, so it fell into disuse.

Namecoin can do everything that Bitcoin can do, and also the DNS stuff.