We are using both. There are performance gains in using the star schema with integer surrogate keys due to join speeds. In addition, certain databases (Oracle, for instance) now recognize or can be forced to recognize star schemas and optimize for them. The relational model fits well with standard (relational) SQL and Relational DBMS's. The dimensional models work exceptionally well with Multidimensional DBMS and cubes.
Remember that Kimball has stated that the dimensional model is normalized at about 1.5 NF (rather than 3rd NF for most relational models).
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The trouble with doing something right the first time is that noboby appreciates how difficult it was.
- Steven Wright