Having experienced both, I can say without a doubt the Vette is the more fun car to drive. It's more agile, stops faster, and feels a lot more planted to the road. The Camaro just feels sluggish, not to mention visibility is better in the Corvette (which is hard to believe). Granted, I'll stick to my heads/cam C6Z.
The cars are marketed towards different groups of people, though, so no... the Camaro isn't hurting the Corvette one bit. It would be a pretty big chore to make the Camaro perform comparable to a C6 Corvette (and I'm talking about more than just straight line acceleration).