I don't think the decline of service is DIRECTLY linked to FF programs. I must preface this by saying that I never flew in "the good old days". These are just thoughts from hearing folks talk.
* Air travel is now mass transit in the sky. I think CO just announced an 80% load factor. That's a STAGGERING number. When you must service that many passengers, you either hire new staff (expensive - and not an option if you are running on thin profit margins) or you simply provide that much less service per passenger.
* Dillution of miles and more award travel is certainly part of the equation. I believe that something like 9% (or 11%? one of those 2 #'s) of UA's seats were taken by award travellers. While those miles that the flier cashed in were "paid for", it doesn't help the bottom line like a fare paying passenger would.
* More Elites. Part of this is due to the changing economy. More and more jobs are in the information/service sector, meaning more travel. Elite status (unlike earning miles) must be earned by one's butt in a seat. So if there are more Elites, it is because they are in planes. You can make a case that they are too generous with benefits.
You are seeing DL roll back benefits on the lower tier elites. If these lower Elites walk, it'll put pressure on the other airlines in two ways (1) they must absorb these fliers, and (2) it'll send a crystal clear message that if you mess with these folks, it'll hit you in your wallet.
If, on the other hand, DL sees no significant impact, you can expect the other airlines to follow suit and you'll see the level or service decline for the Elites as well.
As a Silver on CO, I'd be disappointed to lose those complimentary FC upgrades!
* Culture. We live in a time of less civility. Manners are considered a thing of the past for far too many folks. Airlines can teach courtesy and manners to their staff, but unless they TRULY internalize it, it is yet another task that is part of the job and not a way of life.
* Stress. EVERYONE is under more stress. Connection times are tighter which impacts passengers and staff alike. If your airline flies and hub-and-spoke network, one thunderstorm can effective shut down half the country. Now put 80% load factors for 200 flights into 1 airport terminal with limited food, limited capacity and with people standing around watching their missed appointments accumulate and see what happens next.