First off, I just love that word - flailing - and second, no, I don't think that the query system is suffering. It's just getting a bit tougher. More and more people are deciding to write, which means more and more queries in an agent's inbox. The bad has to be weeded out, which, let's be honest, is most of it. I'm not being cruel; I've been querying since I was fifteen, and now that I look back I want to tell myself, "Stop, you delusional little girl. You're not ready."
While I was querying, I remember reading all these stories about authors finding their agents at conferences. I've honestly never had a chance to go to a conference, so I started to lose hope, thinking that this was becoming the only way to land an agent. I finally got smart and stopped looking at the success statistics for cold-querying. Simply because they're impossibly low, and I believe in exceptions. (You can ask my high school math teacher - he had a no-retake policy. Guess who talked him out of that?) A writer can easily be crushed or discouraged looking at those numbers. As long as you have something that's actually good and unique, you should only believe in being that exception.
People are getting signed from cold queries. I just read a blog post similar to mine about getting a full request and then getting the call. So it's happening out there. Believe that, if you find yourself doubting or despairing. I sincerely think that if you have skill as a writer, you're eventually going to get noticed. It just takes a lot of time, a little bit of luck, and perseverance.