Communication isn't all or nothing. The more expressive power you have, the wider the scope of ideas you can communicate. It may be minimally sufficient to be able to communicate "me hungry" or "that crazy", but more is probably still better.
Tests are only as useful as what they measure. The qualitative changes to communication could have impacted the quantitative changes we're seeing (i.e. lower literacy rates). How much, in what ways, I have no idea; I was hoping to learn more by sparking discussion.
Unfortunately (and ironically) my poor choice of words has instead led to my apparent taking of an anti-literacy stance. Oh well.
It isn't this simple. Literacy plays an important role in information assessment and in decision making. It's strongly associated with health, success in personal finances and career path, and relationship satisfaction, to name just a few areas that have published papers readily accessible online.
To get a look at the ugly side of this, high demand religious groups are a fascinating case study. Constant circulation of repetitive cliches is a key mechanism for isolating their members and making them easier to manipulate.
Edit - I don't mean to challenge the value of literacy so much as speculate whether falling test scores necessarily indicate the loss of that value. Language, how it's used, and how changes spread are all very different in the information age. How do we know traditional literacy tests accurately measure the role it plays in people's lives now?
As an example, written communication used to primarily take the form of writing letters. With instant communication, ability to put thoughts into words quickly has a higher relative impact on communication compared to being able to spend as much time as needed to find the perfect words to convey a message.