Yes, depression can cause physical decline, but even an old dog
who has got sad
and down, that she feels her age, and has aches and pains, can maybe be cheered up.
I don't really know about how wise it would be to get another dog in. That decision is really up to you, as you know her better than anyone else, and know better how she will feel about this. She might find it all too much....and then again, it might lift her spirits....I don't really know.