Gandalf is speaking about the decadance of the elite as Gondor declined. They were more interested in reliving the glory of the past and ignored the problems of the day. It could also be suggested that by specifically mentioning their childlessness Gandalf is suggesting that there were problems with succession that only exacerbated the decline of Gondor

The full staement is:
"The old wisdom born out of the west was forsaken. Kings made tombs more splendid than the houses of the living and counted the old names of their descent dearer than the names of their sons.

Childless lords sat in aged halls musing on heraldry or in high, cold towers asking questions of the stars. And so the people of Gondor fell into ruin. "

The original quote is uttered by Faramir in the book, The Two Towers, Book 4, Chapter V, "The Window on the West".

Here is the quote in full context:
"Yet even so it was Gondor that brought about its own decay, falling by degrees into dotage, and thinking that the Enemy was asleep, who was only banished not destroyed. Death was ever present, because the Númenoreans still, as they had in their Old Kingdom, and so lost it, hungered after endless life unchanging. Kings made tombs more splendid than houses of the living and counted old names in the rolls of their descent dearer than the names of sons. Childless lords sat in aged halls musing on heraldry; in secret chambers withered men compounded strong elixirs, or in high cold towers asked questions of the stars. And the last king of the line of Anárion had no heir.”
http://en.wikiquote.org/wiki/Faramir

Faramir is explaining the decline of Gondor. It seems that the Numenoreans became obsessed with either the afterlife or eternal life, and this fascination took its toll by the birth rate declining. So, "childless lords sat in aged hall musing heraldry" paints a picture of this mindset and the subsequent decline that led to that line of kings ending up without an heir and fading away.

In the movie, the line is given to Gandalf, presumably for purposes of fitting it better into the script.

the pure line of the kings (from numenor) fell into decay when the later kings, as gondor became wealthy, began regretting the choice of their ancestor who chose mortality when given the choice by the valar (his brother chose immortality, and that was elrond...explained in the silmarillion). anyway the kings pondered on their ancestry (heraldry is the emblem of a house, in this case their lineage) and how they could extend their life. in their obsession with avoiding death they neglected their life, and so without children the line in the southern kingdom failed.