If Nassetta thinks that Hampton has outgrown the budget designation, then he's not staying at the right Hamptons. Interstate, small town, etc. locations are plenty cheap - and still a great budget brand.
However, I agree that Hilton has allowed in particular the urban locations to creep up. I still don't see how this stops making it a budget brand however - just because rooms happen to cost a good bit. A rising tide lifts all ships, and occupancies/prices are up everywhere. That doesn't change the brand, though - the properties are still slotted in where they should be compared to full-service, business, or luxury hotels in their respective markets. I paid $200 for a Hampton in Boston a couple weeks ago...but the DTs were $300 and the Hiltons were $400+.
Personally I think that Hampton has the bottom part of the Hilton portfolio quite nicely locked up, has good brand recognition, attracts the same sort of customers nearly universally, and I would not mess with it.