As mentioned in this CNBC article, Citibank's market share in online savings accounts went from 2% to 19% last year. The ads and the bonuses in addition to the 5% rate probably were a major reason for this rise. So perhaps Citibank doesn't think it needs to maintain very competitive rates. Perhaps it thinks it can follow ING Direct's model and be good enough with rates. One thing to note in the article is Emigrant Direct's market share fell from 22% to 12%. Although Emigrant Direct didn't make any major rate drops, it did fail to maintain the status as the rate leader like it had for much of 2005. It'll be interesting to see how Citibank's market share will be this year.
Citibank's Ultimate Savings Account rate is still at 4.65% APY. Unlike the e-Savings, this one doesn't require a checking account. I would think this is likely to also drop before long. For new customers, you can still get a $50 sign-up bonus for this Ultimate Savings Account and a $200 bonus for the Citibank checking account (see post). Since you won't be getting the top interest rate, you matter as well get some money up front.
Thanks to the reader who mentioned this news in the finding deals post.