Paladin is still a highly useful job for party tactics.
However, people tend to prefer doing FFXI stuff with a maximum of 3 people these days. Although that's not how I prefer to play, I can't blame people for wanting to play that way.
And if you're doing something with a maximum of 3 people, it's silly to waste one of those 3 spots on PLD.
For party/alliance-size groups, I like to have a PLD on-hand in some circumstances because a PLD with Atma of the Future Fabulous and a good amount of MDB gear can nullify a lot of magic damage. Plus, PLD is the only job that can use Swift Blade (for blue !!).