There's zero doubt that people will still create art. Almost no one will be paid to do it though (relative to our current situation where there are already far more unpaid artists than paid ones). We'll lose an immeasurable amount of amazing new art that "would have been" as a result, and in its place we'll get increasingly bland/derivative AI generated content.

Much of the art humans will create entirely for free in whatever spare time they can manage after their regular "for pay" work will be training data for future AI, but it will be extremely hard for humans to find as it will be drowned out by the endless stream of AI generated art that will also be the bulk of what AI finds and learns from.