From my perspective as a dev, this is what happened: UI designers who had been trained on usability, who had a good grip on what was/wasn’t feasible technically, and knew to take content variability into account were almost wholesale replaced with more generalist print/graphic designers who were great at pumping out pretty branded PSDs, but not so great at producing usable UIs.
My guess is that this happened because real UI designers are harder to come by and cost more, while generalists are more common and cost less. I’ve not hired for these positions though so I don’t know for sure.