Best service certainly comes at a greater cost(yes, monetarily) which the govt is in no luxury to afford and IMHO, they certainly are trying to put out the best they can. (Just look at the figures the internet majors spend on scaling up and you'd understand.)
Convenience charges : You sir have to realize that because of IRCTC you need not waste fuel, stand in huge queues etc. and thus you have to appreciate that part and pay up the nominal amount. I think they should charge the convenience charges at least for the next few years, may be because the employees still have to be paid and can not be asked to quit their jobs even if you do not go to the reservation counter.
I do accept that Indian Railways being a govt. organization as expected is corrupt and is not efficient etc, but well its not all that bad.