Yes, not many people (aside from the software, services and support community) still use IRC, except Otakus downloading Anime. But in the old days, even the young ones used to. I remember there was a local Metal music channel some years ago which used to be quite active.
It depends on how many people are involved. If we're talking a few, IM conversation is good enough. Microsoft's official client will really suffer after a large number of contacts are added, which will in turn make your computer suffer, and then you suffer. You can get a lightweight client, but I'm not sure the MSN protocol can handle 10s of connections smoothly.
If you say more than 50 individuals, I'd recommend chatboxes like Chatango. The downside is it's hard to keep up with the topic since the box widget itself tends to be very compact in size. In the hundreds' range, IRC is always the best route because of that. It's also better due to the freedom. Rules are set only by the channel. You can mask your domain and get away with small murder (don't need to understand, just know).