It is funny that you mention RE4 as being the last good RE game, I say it was RE2. I loved RE4, but its not a survival horror game. When you have more weapons then the military and don't really have to conserve ammo and the fact you can upgrade weapons and make them powerful, you have the recipe for a good action game with monsters in it, but its no survival horror.
RE is going down hill because they are trying to make RE4 in their new titles. RE4 was a nice break, but what drew me to those games was the sense of isolation, peril, being outmatched and being vulnerable. RE lost that with RE4.
They would have to take half the action game out of the series, so the gun play won't be as good, but survival horror isn't about using guns its about staying alive against all odds.