The meaning of “Decadents” is explained early in the story, where Clarke outlines the future history:
The effect [of thinking machines] on human affairs was immense, and men reacted to the new situation in two ways. There were those who used their new-found freedom nobly in the pursuits which had always attracted the highest minds: the quest for beauty and truth, still as elusive as when the Acropolis was built.
But there were others who thought differently. At last, they said, the curse of Adam† is lifted forever. Now we can build cities where the machines will care for our every need as soon as the thought enters our minds—sooner, since the analyzers can read even the buried desires of the subconscious. The aim of all life is pleasure and the pursuit of happiness. Man has earned the right to that. We are tired of this unending struggle for knowledge and the blind desire to bridge space to the stars.
It was the ancient dream of the Lotus Eaters,‡ a dream as old as Man. Now, for the first time, it could be realized. For a while there were not many who shared it. The fires of the Second Renaissance had not yet begun to flicker and die. But as the years passed, the Decadents drew more and more to their way of thinking. In hidden places on the inner planets they built the cities of their dreams.
For a century they flourished like strange exotic flowers, until the almost religious fervor that inspired their building had died. They lingered for a generation more. Then, one by one, they faded from human knowledge. Dying, they left behind a host of fables and legends which had grown with the passing centuries.
Arthur C. Clarke (1949). The Lion of Comarre, pp. 14–15. New York: Harcourt, Brace & World.
† An allusion to Genesis 3:17, where God admonishes Adam, “cursed is the ground because of you; through toil you will eat of it all the days of your life.” ‡ An allusion to Odyssey 9:82–104, in which Odysseus and his sailors visit the “land of the Lotus-eaters … and whosoever of them ate of the honey-sweet fruit of the lotus, had no longer any wish to bring back word or to return, but there they were fain to abide among the Lotus-eaters, feeding on the lotus, and forgetful of their homeward way.”
So the Decadents sought pleasure through the automatic satisfaction of human needs and desires, which fits the first sense of “decadent” in the question (“characterized by self-indulgence”). And the Decadents declined and faded away, which fits the second sense (“marked by decay or decline”). So it is clear that “Decadents” is intended to be understood in both senses.
Update The question was edited to add the following claim:
Later in the story it is revealed that the Decadents had continued scientific exploration and innovation in areas where the outside world had more or less stagnated for 500 years.
This is a bit of a misreading. The innovation in question (the discovery of “subelectronics”, p. 59) was the work of Rolf Thordarsen, who was not a Decadent, but an engineer hired by the Decadents (p. 16), and who in any case had died five hundred previously:
The walls [of Thordarsen’s study] were lined with ancient textbooks that had not been disturbed for five hundred years.
Clarke, p. 58.
The robot that runs Comarre tells Peyton that all the Decadents had submitted to the thought projectors in Thordarsen’s lifetime, leaving only Thordarsen to complete his scientific work:
“When he had finished us, Thordarsen was still not satisfied. He was not like the others. He often told us that he had found happiness in the building of Comarre. Again and again he said that he would join the rest, but always there was some last improvement he wanted to make. So it went on until one day we found him lying here in this room. He had stopped. The word I see in your mind is ‘death, but I have no thought for that.”
Clarke, p. 58.
So I don’t think it makes sense to read the name “Decadents” as ironic or subversive, since they did not innovate themselves, but took advantage of Thordarsen’s innovations for their own purposes.