Felguards and compete in damage, just not against a 0/21/40 spec. The main problem is the fact that healers generally dont heal pets, our pet heal is a channeled spell(no dpsing while healing), and throughout most of SSC, TK, Hyjal and BT bosses do so much AoE damage that it ends up gimping your damage to keep your pet up.
I use to run SSC felguard spec, and it was like one night im competing in damage the next im not because I got unlucky and my pet didnt avoid most of the AoE's. Now that avoidance is on all pets and is more predictable and you dont have to wear 2 pieces of sub par gear to keep your pet up. It may be able to be a decent spec.
However with the recent buffs to Affliction I'm beginning to lean towards that as being top dog. And the only thing thats going to hold back Demon is the fact that it no longer bring a unique buff. A fire or frost mage with points in Focus Magic is going to have an easier time keeping up the buff full time than having to rely on your pet critting to get the buff up. Basically unless they do something to Meta, like add in a raid wide MD buff when you go demon form, demon spec is going to be as worthless in wrath as it is right now in end game raiding.