I think the fever is abating somewhat. I've posted this here before, but I think the days when office ladies and bus drivers and engineers sign up for English classes thinking that English will somehow improve their lot in life are numbered. The Olympics have come and gone, and most Chinese still have never had, and will never have, a chance to use the English they've spent so much money trying to learn.
In place of this I think there is an increased focus on specialized English for the people who really need it. I don't think it is really limited to English majors (many of whom end up with jobs which actually don't require much in the way of actual English skills) but also includes people who intend to live, study or work abroad, people with jobs that require English knowledge in specialized fields.
I work in international education and teach SAT and AP classes and the demand for teachers in this sector is huge. Not everyone can teach this stuff, not effectively. Chinese teachers aren't suitable for this kind of workbecause these are Western tests designed for native speakers and the usual Chinese approach of memorizing words and grammar structures doesn't really work. Traditional ESL/EFL teachers aren't always cut out for the job either (a TESOL won't help you teach AP Lit. and Comp or Lang. and Comp). You have to have a fairly specific skillset. Likewise, international schools (those that admit Chinese students as well as those that don't) are on the rise and they always have the need for well trained professional teachers.
Business English will also most likely always have a place, along with other specialized courses. My dad used to teach an English/caregiving class for nannies. Lots of offices like to employ a native speaker for in house editing, technical writing, and cross-cultural communications work. It isn't English teaching, per se, but it is a job that a professional teacher can transition into quite easily.
Of course as long as there is money to be made there will be language mills and I don't see parents giving up on English for their kids anytime soon. But I do think there will be an increased emphasis on quality. This goes especially for the big cities like Beijing and Shanghai where foreigners are a dime a dozen and most consumers know better than to throw their money away on poor quality instruction. They can afford to be picky. The students also aren't fooled by backpacker teachers anymore. They're savvy. This goes for universities too. The Chinese government has also made it clear that China doesn't want to be a dumping ground for what they term "foreign trash." I am sure that in coming years we'll see the government start enforcing laws that have always been there, and probably putting new policies and regulations into place.
While currently there's still a (small) place for the no-degree backpacker types (I sometimes visit the Lonely Planet forums and still see China being touted as a place where you can easily get an English teaching job with no degree), I don't think it'll be long before China goes the way of Korea and Japan and makes it very difficult, if not altogether impossible, for people to get legitimate visa-granting jobs without being properly qualified.