I don't think classic rock is dead, but the window of what's acceptable is getting smaller.
First, ask yourself who is going to clubs to dance nowadays. Unless you've found a "boomer bar", I think it's mostly the 20- and 30-somethings who aren't yet mired in the work/house/baby trap. (And that's somewhat regional, of course.) Then, ask yourself what did those folks grow up listening to? Most folks really dig the songs that were popular during their high school and college days. For the younger set, that's a lot of stuff that boomers usually won't listen to, BUT it also includes their parents' favorite classic rock, too. Not all classic rock, just the "good" stuff they heard at home, which is likely to be the generally recognized popular rock classics. And then new country is hot in a lot of places - here in the Midwest, of course, but I've heard it's also pretty popular in parts of NYC and other large east coast cities.
I don't know who said that the fastest way to clear a dance floor is to play Skynyrd, ZZ Top, Bad Company and the like, but around here that's wrong, wrong, wrong. Those bands' classics are most often the thing that gets people up to dance - they're good, strong songs, and most everybody around here knows and likes them. Remember, most people won't dance to stuff they don't know, so the familiar up-tempo strong-snare tunes are my dance floor-filling friends.
But yeah, blues - one or two per night, max. Sad but true (and not the Metallica version ;-)