One would believe SaaS companies would prosper in the present financial environment. The answer appears to be yes and no. Those SaaS companies trying to take business from traditional software vendors in large corporations are not setting the world on fire. While they are doing better than the traditional software vendors, they are experiencing the same downturn as the rest of the industry.
It appears smaller SaaS companies who have new and unique applications aimed at smaller companies are faring much better.
The answer is likely that even though SaaS solutions require no up front hardware and software cost, the expense and effort of large scale changes affecting many direct contributors are still daunting. In these economic times large scale disruptions of productive employees is not advisable.
Smaller projects which have been waiting a long time may now be a better idea.
See this article for more info.
http://industry.bnet.com/technology/1000521/cloud-computing-also-hit-by-it-spending-cutbacks/?tag=rel.res1