Your Nexus 4 doesn't stop working when it stops receiving updates. The closing of this bug doesn't mean your phone is less functional than it was yesterday. You are free to continue using the Nexus 4 tomorrow exactly as you have been for the last two years. This decision only means that Google is moving on to more pressing issues that either affect more users or have a bigger impact on their bottom line.
But we are not talking about such devices. We are talking about something that is nearly a general purpose computer and could have its software updated on millions of devices any time Google wants.
The problem is that there is an incentive for vendors to start ignoring devices when they are not sold anymore. First of all, it reduces maintenance costs. Secondly, it encourages people to buy a new device. However, one could question if this ethical in a time where there is scarcity and where we have to care for the environment. Especially for a device that is still perfectly capable (as I said in another comment, this is a device that is better spec'ed than the currently massively popular Moto G).
It's a bit unfair to pick on Google here, since they are at least providing Lollipop. There are many other two year-old phones that are still stuck on Jellybean. But I think that in general it is an issue that should concern us. I am hoping that at some point the EU will require vendors to provide at least security updates for some period (e.g. three years).
That would be the case if it were an isolated gadget. But a smartphone is a networked gadget; if it stops being updated while the world around it doesn't, it will gradually lose functionality. This could be seen in Ars Technica's long review of every Android version (http://arstechnica.com/gadgets/2014/06/building-android-a-40...).
As an hypothetical example, imagine what if your phone could use only SSLv2, SSLv3, and optionally TLSv1, using a SSLv2-compatible handshake (this is the case with Windows XP, for instance), and a new TLS 1.3 were released which forbids servers from accepting SSLv2 handshakes (this is seriously being considered by the TLS standard developers). As servers upgrade to the new standard, your phone would lose the ability to connect to them.
And that's without considering security vulnerabilities. As time passes, more security vulnerabilities which affect your old phone are discovered and published, and without updates these vulnerabilities won't get fixed.