My observation: garage inventing declined over the last 3-4 decades, but is now resurging in the guise of DIYers and Makers.
To start with, I mean the garage inventing that produces real-world devices. Not software. I'm also assuming the decline based on the number of devices that we hear about being created by a home inventor. You don't hear about that often since the late 60's. Before then you'd hear of devices made by individuals, not R&D shops.
I could well be wrong on these assumptions, so please let me know. This could well be based on the "good ol' times" view of history. Anyway, theories are intended to be poked at.
My theory is that innovators will shift to the technologies that have a lowest barriers to entry. (Yeah, not very novel.)
As more electronics or machining know-how was needed to make interesting devices folks shifted away from the garage. They needed a good understanding of the engineering behind but not everyone had access nor the inclination to do that. Whereas before, anyone with basic mechanical or electrical skills could make something new or innovative.
On top of that, the cost of the base machinery was prohibitive. The machining tools and base electronic components to do anything interesting grew to be quite expensive. Most of the innovations I've heard of over the last 20-30 years involved needing full fledged machine shops and the backing of an R&D division with good funding. I'm not going to get into the intellectual property issues.
So what did these innovators do when faced with these barriers? They moved from the garage and into the den or wherever the home computer was.
As BBSes and then the Internet were taking off, the innovators shifted from creating with the tools that required a high barrier to entry to tools that they could just pick up. Commodity computers and simple programming language tutorials. Look at open source, the numbers of shareware applications that cropped up over the last 3 decades, and now the plethora phone applications.
So where does that leave all the cool new devices that could be made in garages? Have you heard of Makers or DIYers?
My claim is that they are the new generations of garage inventors. Why is there a resurgence? It isn't the economy forcing folks to be creative, this started before the current issues. I believe this is all due to the increase of commodity electronics that are easier to use.
That, coupled with instruction from the internet, has drastically lowered the barrier to entry. However, I think it is still too high. Time and again I hear friends come up with interesting ideas: "Wouldn't it be cool if ..." Then nothing happens. Now, wouldn't it be cool if ... someone could come up with an idea, easily share it, and get help putting it together?