The 1969 male worker median salary was $35,567 (in 2012 dollars). Today: $33,904

There's some truth to this. A while back Mother Jones declared the '00s to be a "Lost Decade" because household income had flatlined. [1] However, on page 36 of the same census report cited by that MJ article [2], you can see that real median income earnings (this is after inflation adjustment) of fulltime individual workers increased 2.6% for men and a very significant 8% for women during the '00s.

[1] http://motherjones.com/kevin-drum/2009/09/our-lost-decade

[2] http://www.census.gov/prod/2009pubs/p60-236.pdf

It's weighted, and accounts for the changing quality of goods. The weighting goes something like: Housing, Transportation, Food and Beverages, Recreation, Apparel, Medical Care, Education and Communication, Other Goods and Services; in order of importance.

The fact that an iPhone costs less this year than 5 years ago isn't a huge issue for most people. Rising rents (or imputed rents), transport costs, food costs, etc is more important.

So yes, in 1969 a flat screen TV (or whatever the equivalent was) would have cost a lot. But food, housing, and so on was cheap. The CPI already accounts for this. Now, the tin-foil brigade who think CPI is flawed typically argue that basic necessities (housing, food) have gone up a lot more; which is the point I think you are trying to make. And it's kind of valid.

You are also arguing the opposite point - that new products are often better than old ones. The CPI aims to strike a balance - some stuff is more expensive, and other things are cheaper.

But overall, CPI is a pretty valid way to compare how much bang consumers get for their buck.

An example:

    1 2 4 6 7 8 9
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    1 2 4 6 7 1000 100000
          ^