A Dwarf Priest is one of my very favorite WoW blogs. The author writes about exactly one topic – Priests – and she does it very well. So when she says that Shadow Priests are "on the endangered list" in Wrath, I think there's probably some truth to that. The core argument is that Shadow Priests' utility is not at the point it was once at (group mana regen is not unique any more; Shadow is not as important for raid synergy), but their DPS has not (yet) been increased accordingly.
One reason why Shadow's DPS is low has to do with spell coefficients. You know how items with +damage or +healing (or now spell power) always say "adds up to [however much] damage"? The coefficient on a spell is what determines exactly how much is applied. Generally it's based on cast times – Greater Heal gets 86% of +healing applied, while Flash Heal only gets 43% – but there are exceptions for spells with added effects, such as Mind Flay and its snare.
Mind Flay, as it turns out, gets only 57% of +damage. Spells with a 3s casting time should generally get 86%, like Greater Heal, but there is a reduction for the slowing effect. However, this is apparently a larger-than-normal penalty: Frostbolt is only dinged for 5% of its coefficient for having a snare. Not to mention we don't even care about the slowing effect in raids. There's a Glyph that recognizes this, trading the slow effect in for increased range. What if it increased the spell damage coefficient as well?
A coefficient that is smaller than it should be is largely a problem for scaling. That is, how much better do Shadow Priests get as we acquire more powerful gear? Smaller coefficients mean spell power, one of the major vectors of scaling, does less – we get less benefit for our gear. Absent other considerations, this means we scale slower. Of course, there are other considerations (talents, etc.), but it's still a risk worth taking into account.
There are additional issues; for instance, Shadow Priests are not really getting any new toys to play with, and they're not really using them in a different way. Overall, I agree that it sounds like Shadow could use some work, as of the current state of the Wrath beta. However, I'm not sure I think Shadow is doomed. This has been a very rapidly-evolving beta, and the devs are very concerned with making everything good before the game ships. If Shadow is not up to par right now, I have faith that it will be buffed.
Edit: As Jill said below, for more information on Shadow Priest concerns and what is being done, please visit the Shadowpriest.com Community Feedback Project.