I share an XBox with my twin so a lot of games in my collection are splitscreen. There's a surprising amount if you can be bothered to find them. And many developers are adding them in sequels, Toy Soldiers: Cold War for example, so there's still demand for it. Sadly, being able to play splitscreen online is rare. Although Gears 3 does it and Borderlands 2 is doing it as well.
Also, when I go round to my friends house, we spend most of the time playing splitscreen or local. Halo 3 or Reach is always brilliant but I was surprised to find that the new Mortal Kombat supports 4 players offline, and it's fun!
I also don't like playing online multiplayer by myself, I now find I have to play splitscreen (On Gears 3, Halo, and even Black Ops). People complain about smaller screens but i've always shared a screen so it makes no difference to me. I don't actually think that i'd of bought a lot of my games if they weren't splitscreen, certainly not Black Ops. But it's amazing how much diffent and more enjoyable it is when the person laying down cover fire is sat next to you.
So, yeah. Playing in the same room definately stil exists, Online is good but it's nothing compared with playing offline, if you can find the games.