(A favorite DVD of mine is a 1998 French film (English subtitles) called Place Vendôme. It stars an aging and alcoholic Catherine Deneuve character who is involved in the glamor jewelry trade and gets crosswise of De Beers over some pilfered gems. It is a very stylish film with a somewhat murky, though sophisticated, storyline. An interesting peak into the gem trade.)
It won't cause the industry to crash any more than $100/oz gold will cause Tiffany to crash. It's all status symbols; if diamonds ever truly became worthless, women would demand that men spend all their money on a different stone that cost the same or more.