Perhaps I am like Rhett Butler in Gone With the Wind and have a weakness for lost causes once they're really lost or more likely I am simply a colossal moron, but I want to see if we can bring this topic back to the original idea as suggested by the topic line: "Game design: Down the tubes."
Assuming this is an opinion poll, I believe this question has two one-word answers. The first answer is a gigantic, gaudy Vegas-style neon sign: "No." The second is an even bigger and tackier neon sign with animation and a choreographed water fountain performing in front of it: "Yes."
"No," because over the years, game design has been refined. When making games, some things work, some things don't, and enough trial and error has occurred that we have a pretty good idea what does or doesn't work and not focus has been on making what does work better.
"Yes," because such rock-hard belief in some things working leads to a flood of games with alarming similarity. You look around and it's hard to not notice how samey games have become since a handful of game design types have proven successful so publishers don't bother trying to innovate and just keep churning out the same god damned thing.
I give both answers because both answers are true. Innovation is becoming more an more difficult to come by, but this may simply be because games have matured out of the primordial ooze a bit and has heaved itself out of the sea, newly evolved lung taking its first gasping breaths. We don't have the wonderful and at times frightening diversity in game designs as we did back in the 80's, but we also have games larger than a kilobyte so we don't have to pretend that dot is a barbarian warlord.
Maybe I am simply a crusty curmudgeon, but during those halcyon days, innovation was key to success. You had to come up with some kind of unique play experience or you were dead in the water. Nowadays, it seems like all you need to do is take your Duke Nuk'em game engine and slap "Clive Barker's Star Trek" on the cover and it'll sell.
Actually, I am definitely a bitter pill when it comes to that sort of thing. Don't get me wrong, games are a business and the point of producing games is to make money. But I think there is a crucial difference between "Hey, this is a fun game design we've come up with. Let's sell it to people!" and "Hey, I've just bought the rights to Lindsay Lohan's underpants. We can stick it on our generic shooter and sell it to people!"
But then, all of this doesn't quite answer the question, does it? If game design is down the tubes, the above suggests that the tubes have been made narrower since game design in general is hobbled by being forced into a handful of already proven genres.
This means, at best, you can make a game like some other game only "better." "Better" being the tricky part because what actually constitutes a better game is hotly debated and usually land in the land of lowest common denominator where "Bioshock 2: Now With More Blowjobs" is awarded game of the year.
While at worst, game design becomes categorically lazy, merely retreading what has been done before and somehow managing to completely screw it up. This sort of thing is the poster child for the quick-buck game publishing. It seems ironic that as gaming has progressed, the bar has been set so high that most publishers are content to simply go under it than to bother trying to clear it.
But, all of this is nothing new, either. Like in the afore-mentioned 80's, there were scads of Space Invaders and Pac-Man rip-offs with dodgey controls, piss-poor game play, and all of the imagination and charm of overcooked bean and lentil soup. So saying that game design is going down the tubes is a bit of a Chicken Little complex, I suppose. In the end, it's Sturgeon's Law: "90% of everything is crap." So shitty games are as old as the medium itself. It's when the 10% that isn't crap turns out to be mediocre that we should start worrying.