Good thread and discussion but I am going to throw a wrench in the works. I agree with redbaron – new blood is important. It revitalizes the discipline by injecting atypical approaches and consequently, innovative ideas.
Nonetheless, it is a mistake to fall prey to the pop-culture trap with phases like “living in the past.” The classic guitarists others mention above are still living human beings who constantly reinvent themselves and advance technique. Classic playing is classic regardless of what era a guitarist is associated. The age, sex, ethnic background of a musician doesn’t matter. Only the ideas matter because they take us down a different and inspired path.
Rather than sub-dividing guitarists into pointless niches (e.g., greatest solo played at a Sunday picnic by a red-headed Norwegian teen…

), focus on the idea(s) which emerge despite subset.
Of course, the heart of redbaron’s question is about the state of the solo today. Redbaron challenges us by asking, is the solo extinct? I honestly don’t think so. It is a false perception.
Our exposure to new solo material is limited because today we can easily self-impose limitations on what we styles we listen to. For example, one can choose to listen to only heavy metal on their ipod and seldom if ever be exposed to blues, jazz, country, classical, etc. As a result, that style is confined by the listener within a vacuum and can be endangered of becoming stagnate. (Please note, metal is used simply to illustrate the point - not an attack)
Meanwhile, guitarists who aren’t stuck in a vacuum continue to create new material. Guitarists such Hendrix and Satriani (and many others before and since) were and are influenced by wide-ranging styles and thus, they created more dynamic solos – in reality, the mutt is healthier than the thoroughbred.
The mutts will survive and thrive– it’s a law of nature. Some are young, some old, and some are redheaded Norwegians. Unfortunately, their recognition is restricted because they refuse to conform to the boundaries of the self-imposed limitations of listeners. In turn, we mistakenly perceive them as extinct.