That seems to be the import of this story in the Times Online:
After studying 25,000 children across both state and private schools Philip Adey, a professor of education at King's College London confidently declares: "The intelligence of 11-year-olds has fallen by three years worth in the past two decades."
On the other hand, the description of the test looks like it covers a fairly concrete set of knowledge:
In the easiest question, children are asked to watch as water is poured up to the brim of a tall, thin container. From there the water is tipped into a small fat glass. The tall vessel is refilled. Do both beakers now hold the same amount of water? "It's frightening how many children now get this simple question wrong," says scientist Denise Ginsburg, [Michael] Shayer's wife and another of the research team.
Another question involves two blocks of a similar size -- one of brass, the other of plasticine. Which would displace the most water when dropped into a beaker? children are asked. Two years ago fewer than a fifth came up with the right answer.
In 1976 a third of boys and a quarter of girls scored highly in the tests overall; by 2004, the figures had plummeted to just 6% of boys and 5% of girls. These children were on average two to three years behind those who were tested in the mid-1990s.
I'd like to think that sixth-graders could get those things right, too. But the story of the researchers -- that kid's aren't playing with sandboxes and mudpies enough anymore -- doesn't inspire me with confidence. I can definitely see how videogames might not be good training for questions about Archimedes' principle, but going from a third to a fifteenth able to "score highly" isn't necessarily about "general intelligence". I wonder if it's about less advanced coursework for talented students (i.e., the third that used to "score highly").
It does give a hint about the Flynn effect: If education can make kids do worse, it might easily have made them do better. But the outcome is unclear -- the real reason to pay attention to the Flynn effect is the increase in adult IQ. Here, it's not clear what the result for the 11-year-olds will be.