The crash had nothing to do with the gamers (for the most part) -- it was strictly the industry that felt the pain. From our viewpoint, it was 'business as usual'. We just switched gears. However, the casual customers (those who had a game system but never held videogames in that high a regard) thought of it as nothing more than a fad and simply stopped wasting money on the barrage of crap that was unleashed as the 'fad's' peak. They moved on. And when an industry goes from mainstream to limited market - the monetary losses are disasterous.
I personally didn't even know there was a crash until well into the 90's (when I started reading up on the history of the biz). I was already gaming on the C-64 and soon thereafter, the NES was starting to make waves.
Thankfully, Atari botched the deal to distribute the NES in the states and Nintendo decided to go at it alone. Based on Atari's track record, the industry may have never recovered had the deal gone through. The rest is history.
But many game companies (EA and Sierra for example) wouldn't touch cartridges for years because of it. Many game companies never recovered and many jobs were lost. Coleco, despite the Cabbage Patch Dolls, never fully recovered. Mattel abandoned their electronic game division. Imagic - gone! Even the company that started the concept of 3rd party publishers, Activision, took a substatial hit.
In a somewhat related story (considering the cheap, rushed licensed titles that led to the crash in part) - Warner Bros. is charging higher royalties for games that score less that 70% in reviews. I applaude that since I shudder to think that people made money off of Enter The Matrix.
http://www.firingsquad.com/news/newsarticle.asp?searchid=6606