Where I work, we use google apps, and so everyone has each other on Gtalk. We use the status line to indicate whether somebody is WFH or OOO, which works great. But with hangouts, I lose that information. Worse yet, it doesn't show my contacts that I don't talk to, which is bad because I care about their online status. Even worse yet, if I "revert to old chat", but reply to somebody using my phone where I don't have that option, that conversation get sucked into the hangout side and I don't get it in my email anymore.
So hangouts is now hiding information I need and unreliable at delivering messages. That makes it worse than useless: If it wasn't there, I would at least use some alternative. It would be better for it not to exist.
They've removed this integration in Android, and now you have to go re-find that contact in a separate hangouts app. It's a terrible UI regression.