I don't think it ever left, at least in my mind. In a bathroom my parents remodeled my mother installed one kind of wallpaper below the chair rail down to floor, and above the chair rail up to ceiling with a different pattern. Came out really good. Of course, not all the walls in said room had wallpaper..just paint...

I think wall coverings are more used as accents then doing the whole room but there are some great papers out there

Of course wallpaper has never left- when it is done right it's timeless!