Just to add some numbers to the debate over whether 20mph zones have led to increased cycling levels or not, here is a chart showing the cumulative amount of roads in 20mph zones (measured by km of road) in London between 1990/91 (when the first one was built, in Kingston upon Thames) and 2007/08.
As you can see there has been a massive increase in the last decade, from about 200km of roads to about 2000km. The increase tailed off in 2007/08, but since then we've had Islington become the first borough to make 20mph the default limit on all minor roads (albeit without much in the way of active traffic calming measures), so it must have gone up a good deal more by now.
The source is this research (pdf) carried out for TfL in 2008*. The same research estimates that the introduction of 20mph zones led to a reduction of between 26% and 38% in the number of cyclists killed or seriously injured. The last decade has also seen a substantial increase in cycling in Central London (see table 2.10 in this big pdf). Obviously a lot else was going on at the same time (such as congestion charging and fare increases on public transport), but I think the burden of proof is on anyone who wants to argue that 20mph and associated improvements in safety didn't encourage many more people to cycle.
* I turned the figures in Table 2 for new zones each year into a cumulative total, in case you're wondering.