CNN reports on the Pope's concern that materialism is replacing spirituality. There is some support for his claim, consider Gruber and Hungerman's "Church vs. the Mall" paper in which they find the removal of blue laws (like bans on early hours of operation on Sundays for Malls) have had an adverse effect on religious participation. However, Larry Iannoccone's research has suggested overall religious participation and fervor has increased over time, though it has been through competition that has picked away at the traditional religious powers like the Catholic Church.
Regardless of whether or not growing wealth (which they use interchangeably with "materialism") is good for religions in general, I do believe that we are witnessing a creative destruction in spirituality, particularly in the wealthiest countries like the United States. People worried about day-to-day survival probably spend less time hammering out the specifics of the nature of the spiritual world. Consider the rise of Scientology or Eckhart Tolle's new best seller, which represent new ways of thinking about these "higher plane" issues. Part of the tone of the environmental movement seems to have a spiritual flavor to it.
I think this is what the Catholic Church and other traditional religious movements are actually concerned with, in part because it is bad for their individual movements and in part because they tend to view spiritual movements outside their own halls devoid of any truth.