It shouldn't be like this. Technology and engineers' capabilities are advancing so fast right now that everything that is good about a current product can, in theory, easily be built into its successors. But sometimes this doesn't happen. Here are a few choice examples of upgrades that are downgrades, and why you're better off with the older tech:
The obvious number one product for this list. Vista is the new shiny operating system Microsoft released to replace Windows XP. Except it hasn't, because it's a poor upgrade. It's slower, bigger, and buggier. Many people, not just those in the opportunistic Apple ads (and Apple has its own problems), would rather get a new computer with the old XP operating system.
Why it happened: Books will be written about Vista's failures, which, in fairness, probably have as much to do with Microsoft's need to support a vast universe of third-party hardware and software products as with flaws in Microsoft's marketing and software development strategy.
Intuit apparently believes that new users won't buy a personal accounting product if it's last year's model, and it also wants to upgrade its current users each year. So it "sunsets" older versions after three years: it turns off online access to bank updates and eliminates support. Sadly, some older versions of Quicken are faster and more stable than the new versions. But if you're a Quicken user, you can't stick with "classic" versions without giving up useful online features.
Why it continues to happen: Intuit has locked itself into a yearly upgrade cycle on a product that clearly takes more than a year to update.
The old WRT54G wireless router was a reliable and economical product, but a few years ago Linksys released a version 5 of the product that they knew was buggier. Knowledgeable users were able to get the older version by shopping online for the special "WRT54GL" router, which was really the previous version. It cost a few extra bucks, but it was a far better value.
Why it happened: Cost cutting, pure and simple. I covered this in 2006.
The new Zune is a killer product. But the old Zune is the killer deal. Not only is it widely available, which the new version is not, but you can upgrade the old version to the newer software, giving you, essentially, a lot of Zune 2.0's best features for a used car price. You give up some improvements (like the better screen, improved battery life, and touch-sensitive control pad), but the older version is still the better deal.
Why this happened: I tip my hat to Microsoft on this one. Making the old Zune upgradable to the latest software is the right thing to do, and it opens up a value line of Zunes for people who don't want to spend the extra money to get the latest hardware.
This is a personal beef of mine. The last generation of iPod can send video through its audio jack, making it a reasonably priced and convenient system for getting digital video onto your TV. The newest iPods don't have this feature. You need to buy a dock adapter to get the video out. That's robbery, since the machine is clearly capable of showing your video without requiring any special hardware. Speaking of which, iTunes has become a bloated pig, at least on Windows.
Why this happened: Probably Apple saves a few bucks this way. But consumers pay.
If 10 is good, 12 has to be great, right? Each generation of digital cameras gets more resolution. That's good if you want to blow up your images to wall-size, or crop your photos aggressively, but increasing the number of pixels captured in a picture has tradeoffs, especially on compact cameras with tiny sensors to begin with. Increasing resolution can reduce sensitivity and dynamic range, which will result in pictures that just don't look as good, although they may be, technically, sharper. In SLRs, with their big sensors, moving from a 6 megapixel sensor to a 10 megapixel sensor, as is the difference between the almost identical Nikon D40 and D40x, won't cost you much except dollars. But in compact cameras, you might actually pay more for images that aren't as good.
Why this happens: Feature wars and the fact that it's easier to market more-is-better.
On the Web, there's very little opportunity to use "classic" versions of services. When a company updates its service, everyone gets the new version, like it or not. Some giant consumer-grade products are available in older versions, such as Yahoo Mail, and Microsoft Hotmail (news story: Too Hotmail to Handle) but usually only for a short time.