There was a time, yes, when Islam pretty much saved the knowledge of the classical world -- and we should all be very, very grateful for this.
But what you say is true -- for some reason, Islam stopped translating books from anywhere in the world into Arabic or the other languages of Islamic nations, apparently as if they had lost interest in any knowledge outside of that prescribed by the religion itself.
For the record, the Islam you see today took a long time to become that.
After Muhammad's time, the early Muslims for several hundred years had a strong debate culture, strong philosophical and astronomical mindset. This is from the Qur'an itself btw, which was the root of that mindset.
Anyway, as Muslims started spreading they started coming in contact with philosophers before their time and seeing how strongly it resonated with the views they had already. From a natural love of knowledge innate in the Islamic mindset, they took up quite a lot of scholarly effort into preserving prior knowledge. All at the same time as their own intellectuals had, since the family of Prophet Muhammad (Ahlulbayt) been contributing to it themselves.
Islam as a collective (but it isn't and never has been monolithic) went through several reforms. The most dreadful and damning of them was when the Ottoman Empire sprung up because they gradually put an end to the almost Faustian spirit of Islam prior. Eventually the Ottomans pulled Islam down into a place it had never been before, particularly later in their reign. As the Ottomans fell apart and degenerated, Islamic civilization was exposed and vulnerable, the Saudi royal family is one clear example of this happening in the replacement scheme.
Due to political and social issues, the mainstream of various Islamic societies started driving towards illiteracy and fundamentalism to replace the philosophical, scientific and mystical mindset it once had.
It's only got worse since then.