A bunch of people, including me, just kept commenting "Roll back!!!" But for some reason that's beyond my understanding, they said they could not rollback the upgrade. And that was the end.
That said, I actually still use Digg in its current form today because I find it very useful. I just wish it had the on-site comments, but I understand the moderation nightmare task they'd be taking on if they enabled comments like the old Digg.
Anything that's driven by users rather than vetted and sanitised by trusted writers/editors, will scare lucrative brand based advertisers. Just look at Google Adsense's content rules to see how much advertising shapes the web's content.
I think that's what happened with Digg. I speculate that something similar is happening with Reddit but at a much slower rate - like closing undesirable sub-reddits etc.
http://techcrunch.com/2012/07/12/digg-sold-to-linkedin-and-t...
He moved to Google after his startup Oink/Milk crashed and burned, of course.
In the show "Silicon Valley" they even made a joke about how Rose had to fail at a bunch of stuff before he could "succeed" with Digg, and then subsequently failed at a bunch of other stuff afterward as well.