The problem with usenet is that its usenet. It will never change. The poor experience, the slow updating, the almost non-existant moderation, the impossible spam filtering, endless abuse, nothing to stop stuff like alt.tasteless invading alt.cats - again, the difficulty of searching it well, etc.
I think a lot of people were seeing what web forums were doing (look at Slashdot or Metafilter from that era) and decided that supporting usenet was betting on the wrong horse. I don't really blame them. What we can do with completely controlled systems on our own software and on our own servers vastly surpasses what usenet was capable of.
The complaint here isn't that Google is failing to fix today's Usenet, but that their historical archive of Usenet content going back to the early '80s, which they acquired from DejaNews, has a pretty broken interface (and is worse than it was before they bought it).
I think a lot of people were seeing what web forums were doing (look at Slashdot or Metafilter from that era) and decided that supporting usenet was betting on the wrong horse. I don't really blame them. What we can do with completely controlled systems on our own software and on our own servers vastly surpasses what usenet was capable of.