I'm not convinced at all about this, a complete withdrawal of catering sounds ridiculous to say the least. I could perhaps foresee a slight reduction in the catering offer on WC, but not a complete removal of all catering.
However, having said that, I can perhaps see why catering isn't as popular as it might have been in the past. I don't often buy the Virgin Trains standard class catering myself, except for tea and coffee. I think this is the case for a lot of travellers on Virgin's services. Firstly, a lot of the journeys aren't particularly long - a majority of travellers on WC services must spent 2h15m or less onboard. This is different from lengthier journey times in the past. You can spend that sort of time on some regional services with limited or no catering and most people are happy enough.
Secondly, Britain has a bit of a "sandwich culture". Don't get me wrong I like nice sandwiches as much as everyone else, but sandwiches can be prepared at home and they also available at stations in many different outlets. They are really easy to pop in your bag for later. Also, the rise of the "meal deal" in the UK, has made it quite reasonably priced to pick up a decent sarny (or salad), snack and drink from multiple station outlets (e.g Boots, WHSmith, Upper Crust).
What is the main core of daytime catering onboard VT at the shop? Sandwiches/wraps, snacks and drinks. All available from numerous outlets at large stations. There are other things, of course, like hot burgers but aside from the breakfast items, sandwiches and snacks seem to be the prime offering in terms of food for the rest of the day. That's not a criticism, because it's what many travellers in the UK tend to want to buy.
First Class catering, at least on weekdays, is a whole different situation however...