Personally, I struggle with this in a lot of the projects I get involved in. I come from a very metal background, and while I was never a full-on shredder, there WERE shred elements to my playing, including neo-classical lines. Now that I am doing a lot of work with singer-songwriters, the concept of the "guitar solo" is different. An artist will often want me to play lead on top of the WHOLE song - around the vocal lines, creating counter melodies that support the key and tension of the song.
So, am I soloing? Sometimes there are even spots where I am playing a melodic fill - but it'll be 4 bars at the most.
Then in the music I do with my own song writing partner/vocalist we do have guitar solos, but some songs they feel forced - I even though I WANT them there. As a guitarist I am wondering if every song NEEDS me to showcase my "skills". Again, I struggle because I grew up in the era OF the guitar solo - EVERY song had one. The approach/attitude we tend to take is "Will the solo support/create tension that created to help propel the vibe of the song?" There have been a couple of times we've cut a track, gotten it completely done, listened to it and realized the solo took away from the song. It was a distraction to what we were trying to accomplish with the song.
In my "solo" music, anymore, I am doing more with experimenting with textures and utilizing the piano as the focal instrument. Surprisingly, it looks like my first solo album (5 of 8 songs done) is going to have almost NO guitar at all. So far one track has a clean guitar arpeggiating the chords under the melody. Have I become bored of the guitar? Maybe. I do know that as a writer I don't find my skill level in a place that pushes my creativity anymore. It might be time for lessons again, but I am finding challenge and fulfillment in writing with other instruments, so maybe the guitar has taken the backseat.
But back to solos in the mainstream. I think music goes in cycles. To me, it feels that we are in a 'modern disco' phase. So, following that logic, up next is the return of hard rock/pop metal. There are already groups on the fringe of the mainstream, and you have your modern 'monolith' bands like Metallica, etc - so it's not like things have totally died. It'll come back around. Unfortunately what seems to be missing in guitar oriented music these days is playing with "taste". Bodia gave a ton of great shred examples that are current - and yeah, that's out there, but it's not gonna appeal to a "pop" fan...and while we may not want to accept it, pop fans determine what it "mainstream".