I'm a lifetime platinum member and hardly ever get upgraded rooms - mostly it's because the hotels I stay at are 50+% filled with other frequent stayers. When i do get upgraded it's at hotels I stay at alot and they recognize my name.
Yes, the program has been water down - on purpose. It started when they started doing rollover nights and reduced the qualifications for life time status.
And yes, they used to give away a platinum gift each year, but it was usually junk so I don't miss it.