I would actually disagree with this history slightly. Hardware audio was dead long before Vista came out. Creative bet big on accelerating something that didn't actually need accelerating. Audio processing used a tiny TINY portion of the CPU time and was simply not worth buying hardware for. The inclusion of on-board 7.1 sound which wasn't appreciably worse than what Creative offered for anyone other than someone who actually did audio recording is what killed Creative. Even then most professionals were going the route of M-Audio or other "audio" affiliated companies while Creative seemed to be chasing gamers with a useless product.
In any case the problems with hardware audio existed long before that point too. Creative were pushing procedural effects based on game location to be applied to sound rather than any actual processing. "Environmental" effects like EAX were significantly worse even at the later stages than what A3D were doing with actual simulation of the sound. They were firmly in the litigate, not innovate camp.
Now that being said I'm not sure A3D would have survived this day and age either because I in general think that people don't care enough about the potential sound improvement to spend $100 on dedicated hardware for it. Now if they still existed and licensed it off as software extensions....
Side note: Just checked out Creative's website. When their flagship card doesn't mention the word "games" on the website you know you're chasing a different industry. But oooh it has swappable opamps, like that matters for some reason... yes it's a company truly lost.