I don't see how anyone can claim Australia are "slipping". I mean, how short is your memory? In the last 12 months or so Australia has beaten Sri Lanka and India away from home - something which is widely acknowledged as being close to impossible to do, performed two brutal whitewashes at home, beat the second best ODI team in the world 5-0 and followed it up with a test series win. So far they've lost 4 games in an Ashes tour, and their performance last night wasn't that bad aside from Kasprowicz and Gillespie, and Gillespie at least will undoubtedly improve before the series is out - not a great deal of evidence to go on.
Now, I think England are a very good side based on what I have seen recently, and I think they will provide real opposition for Australia, but judging on the basis of two ODIs and a tour match that Australia are in decline when there is absolutely 0 evidence of it up to now is dubious at best. Don't forget those New Zealand fans who, after a good run from New Zealand and a 1-1 draw in the Chappel-Hadlee series were predicting New Zealand could run over the top of Australia in their home ODI series, only to suffer a whitewash. Australia are clearly capable of playing far better than they have this weekend, and before the tour is out they will.
McGrath is as good or better than he has ever been, Gillepsie is out of form but he's only 30, Lee is undoubtedly at his peak assuming he returns fit, and Australia has the same old guard who have done well in the past, with additions like Clarke, Katich and Hussey who hardly weaken it much. Now, I said during the New Zealand series that I can see a weakness in Australia's pace attack being a bit one-dimensional, hence I wanted Lee in the test side, but one-dimensional or not it is still the best in the world by a fair margin, and the class will come through. Let's not forget that this Australian side always rises to the occasion, and in this instance the "occasion" is the FINAL of the NWS (although all the matches against England have significance, of course), and the test series. Unless Australia lose to Bangladesh again they will make the NWS final, so as an English fan I'd be keeping an eye further into the series.
So far, Australia look very out of sorts and England look extremely sharp and more than competitive, but things can change quickly, and have in the past.
PS: Sorry about sounding like a parochial fan, but I do think it's astonishingly premature to claim Australia is in decline already. If Australia lose the Ashes, you've got a case.