IMO it started it's decline when Edd Ed n' Eddy ended, they cancelled Foster's Home For Imaginary Friends, and aired Chowder
Personally, I hated Foster's Home. There was certainly nothing wrong with the idea for the show, and I'm sure it had it's moments, but I simply couldn't stand it.
The problem I had with it was that the creators felt some sort of horrible urge to turn Bloo into a complete jerk. The pilot-movie-whatever portrayed Bloo as a completely friendly character, but after that it's as if his friendliness was just shoved out the door so that he could play the role of the self-centered comedy relief who learns his lesson the hard way at the end of each episode. Comparable to Eddy, strangely enough.
Long story short, I don't like Foster's Home because they flipped the (perfectly fine) personality of one of the main characters completely upside-down after the pilot.
Great theme song, though.