If it's true that not many people are upgrading... then most of the 9.3 million iPads they sold in the last 3 months went to new iPad owners.
That's actually not too bad.
I often hear "market saturation" but then Apple sells more than any other tablet maker. They might not be growing anymore... but they're still selling a lot of them.
And since they do last a long time... old iPads are still being used too. Not many iPads get thrown away... they continue life as a kid's tablet or coffee table devices.
Yeah, due to the type of device, old iPads (up to a point) are still useful. I have one in my kitchen with some minor damage to the screen for recipes. I have another in my cube at work running Cathode as an ssh terminal. They don't take up much space and have a fairly maintenance free OS so they're OK to have around for much longer than an old Windows machine with 9 adware toolbars layered over the top of Firefox, etc.