The two main thing that ultimately killed them in the end was their TV deal with TNN. They put ECW on the air pretty much just to see if wrestling would play well on their network, before giving Vince $100 mil to bring RAW to the network. They constantly demanded ridiculous changes (you can't say "hate" for example) never promoted it, never even put up a commercial for it. Once WWE signed the deal, ECW couldn't get TV, because looking for a new network would violate their TNN agreement, until TNN publicly announced their intention to drop them. That was the final nail.
It makes one wonder if they could have kept afloat if they could have just streamed it online. That's what's so great about the net: the big "gate keepers to the audience" that was the networks is no longer a barrier.
All that being said; the other big problem was that Paul Heyman was a genious as far as creating content and producing product, as a business man, he was absolutely terrible. Clueless. His bad decisions can really be summed up by the fact that the Duddleys asked for a $1 raise - just a little sign of respect, really - and Paul let them go because he was adamant that he couldn't compete with Vince and wasn't going to try, saying "the only people working here are the people who really *want* to be here." He really needed to be head of creative, or head of wrestling operations; whatever you want to call it, with someone else heading up the business end.