The first UF book I recall reading was "Burning Water" by Mercedes Lackey, in 1989. At that time, I had never heard the phrase "urban fantasy."
I think the urban fantasy genre is growing stronger, rather than weaker. I am not disillusioned with the genre. I've seen a problem with the writing quality of some novels, more than the genre itself. A high quality, well written, UF novel flourishes, and then a number of poorly written knock-offs by other authors get published. This isn't something that happens solely with UF, though.
Overall, I think reader ennui is less with the genre, and more with the publishing of the same, or similar, story, over and over, without fresh characters, characterization, or good writing. I know better, yet I've been suckered into buying novels that had an interesting description, with some awesome cover art, only to discover that the writing is sub-par. That does happen less frequently since I can often view sample chapters online.