I don't think it's a "downgrade"...
- Video camera was useless and terrible quality (640x480 IIRC). No loss here. You couldn't even take pictures with it, never mind the horrid resolution.
Doesn't look THAT terrible to me:
http://www.youtube.com/watch?v=I-I--4JrERI
It was a nice added feature for a device that thin.
Same for the loudspeaker and the mic. It was a swiss-knife feather-weighted pocketable gadget. You wanted to film something funny? Bam! You wanted an alarm clock when traveling? Slam! You wanted to watch a Family Guy episode (funny lines are just as funny on a tiny screen, same applies to a lot of other shows, of course you aren't supposed to watch Avatar on it) on the bus? Bam! Plus FM radio, podcasts, etc
With the 5G, the iPod Nano reached its top in functionality.
Now it's a Shuffle with a touchscreen, more storage, the dock connector, video out and fm radio. Which is still a WIN for a lot of people, don't get me wrong. The touch (THAT touch) interface is so natural and fast. And the "clip-on" design is so small and convenient.
Let's just hope it will re-gain the 5th gen features year by year, but in the new touch-based and clip-oriented paradigm.