It's still quite alive... I do it often at pawn shops. Mostly the only places that have ever been largely succeptable to price-haggling are local and privately owned shops. With the large industrialization of the music business (Guitar Center/Musiciansfriend.com) it's hard to haggle because the prices are pre set by a corporate amount. They will however work with you on the prices of used guitars. Normally they price them slightly over blue book value... and yes... there is a blue book for guitars just like there is for cars....

But like I said, with the major corporations taking over most places you can't budge them... because of the mass amount of business that they get. If you won't buy it for the price they want.. the next person will. The only thing you can normally haggle about is a trade in price...