My own personal opinion as to why Corfu is suffering more than most other destinations is what I term the 'Kavos effect'. I'm not jumping on the bandwagon of knocking the Union Jack shorts brigade but I think Corfu has shot itself in the foot in the following way.
There are many more people booking holidays in a semi independant manner, especially last minute deals. These deals usually come in the form of allocation on arrival. Thats O.K. on a lot of Greek Islands where it doesn't really matter where you end up if you're one of the growing number who simply hire a car and get about or even stay in a nice resort. With Corfu however allocation on arrival carries a very strong risk of being dumped in Kavos. As I have said this is my personal view, as a bloke not in first flush of youth and with a young family I simply can't take the risk and I am sure that there are many others like me. Therefore although losing loads of last minute punters doesn't affect accomodation providers, it does effect strongly all the other businesses, restaurants, shops etc. because in my case I save on flight and accomodation to splash out on food, drink, sightseeing.
It's such a shame with Corfu undoubtably being one of a limited number of premier Islands in terms of what it can offer asides from verticle drinking, it would be nice if the tour operators had 2 streams of allocation on arrival, 'clubbers' and 'families'.