I highly doubt this would mean the end, especially since at leasy two out of three new gaming consoles are based on PowerPC architecture, the much hyped CELL technology is based on it and, as you mentioned, is also in Xylinx devicxes and presumably many others I don't know about.
There are many CPU architectures out there that don't have half of the volume PowerPC will still have (C3, Eden,...) that have found a niche, so why not the PowerPC.
On the other hand, it would prove my point that I made at the company I work for. When we had to migrate from Philips XA processors due to obsoleteness to a new platform, we went to Xilinx/PowerPC, much to my dismay. While SW developers argued that PowerPC had a more solid developer community then Nios, my main argument was that, no matter what, you could always synthesise a Nios in whatever new component Altera comes out with while this was not a guarantee for the PowerPC.