Digg's decline began before Web2.0 and any redesign - it was mainly a result of the "bury brigades" killing anything that was remotely interesting through downvotes and leaving it to be a dull feed of mainstream news links, which got progressively worse over time.

Reddit has the bury brigades too in some of the more popular subreddits (the ones which you used to be subscribed to by default), but you can avoid them by only participating in the subreddits that interest you. This is where Reddit is a huge improvement over what digg was, but I wouldn't say it's immune to failure. The more they try to be the arbiters of what people ought to find interesting, the less people are going to put the effort into interacting with the platform as a whole.