I think it's true. Palin's crowd is shrinking, and wasn't large enough to do the job in the first place. Either she or Newt would have such high disapprovals that they would galvanize support for whomever ran against them.
If Republicans are smart, I think they'll use the next Presidential cycle to begin to build a new constituency with a broadly appealing candidate (which also leaves Romney out, due to his angry-white-male persona), no matter how loudly the dying one wails.
Even then, selling their platform looks like a mighty tough job, and just haranguing Democrats (a la McCain) is getting less convincing to a younger electorate.