Netscape had quality issues long before version 4. Navigator really felt like it never left beta. Version 4 was just the point where the accumulated technical debt had become so huge that it proved impossible to recover from - and at the same time IE matured as a credible alternative.

The <img> tag was a nice pragmatic solution, but from there it went quickly downhill. Already around version 2 Netscape was adding badly thought-out features like <font>, <frameset> etc. which have taken a decade to get rid off. Rendering bugs and inconsistencies were never fixed.

They could probably have recovered and consolidated by stepping back and focusing a bit more on quality and sound design for a while. But they didn't.

It seems every single project Netscape developed was either abandoned or turned out so buggy it was unusable. Clearly no single programmer can be blamed for that, and I believe Netscape had lots of brilliant developers on board. (And I don't doubt that JWZ was a brilliant programmer.) It must have been the overall "duct-tape" mentality that was to blame.

Some of the other replies blames various parties like Collabra, the "business people", strategic mistakes, Microsoft and so on. Sure Netscape made some strategic blunders, but it is still one of the few examples where genuinely bad code quality was a major reason for the downfall of a company. (Quark would be one of the few other - like Netscape they squandered a near-monopoly by releasing increasingly buggy software and pissing off their users).