If they're keeping restoration, it needs some major reform. I think you'd agree either way that the whole system of healing yourself needs something done to reform.
In the suggestions thread over these past few years since Oblivion came out, I've seen some good arguments against having a restoration skill. You can't think of it as a one off deal, you should consider the whole system of how you heal yourself. Consider returning the medical skill to the game.
If there's a potion for curing disease and a spell for curing disease, can't there be something more specific? A specific potion for curing the disease and perhaps no general spell for curing disease? How would that affect gameplay? You'd have to be prepared ahead of time to have that potion on hand, and if you weren't, that disease might pose more difficulty than the current setup with the catch-all routines.
I wouldn't consider it much of a loss to nix the restoration if versions of the healing spells were placed into schools like Necromancy for the body knowledge, Thaumaturgy or Daedric for healing blessings, Enchant can help when you make something to heal yourself, and of course the Medical skill for people without magical talent. The game shouldn't be a frozen picture of Oblivion's skill set, don't dismiss ideas just for that.
I will agree that restoration needs to be reformed. If restoration was to be removed from Oblivion's current magic system, then I would propose moving the absorbs to destruction, the cures to alchemy, the fortifies to either alteration or more likely mysticism, restores to mysticism, and the resists to mysticism as well. Mysticism seems to be lacking to me, and if any school fits close enough to enough to restoration, it's mysticism (isn't damaging, summoning, altering, or only an illusion).
As for your disease example, I can agree with you that restoration makes diseases completely harmless. In my mind, diseases should have a scale somewhat akin to radiation in fallout. The three main points in that example are that I think diseases should be given on a scale. 0 means you don't have the disease, 100 means you die. You lose attributes as you get infected worse, and you get infected worse by neglecting to cure your disease or by maintaining contact with the infected. Cure potions would take off say 25 pts, altars 100, and spells would be much less, maybe around 5 pts as an expert, 10 at master.
Finally, don't assume that I'm basing everything off Oblivion. I've played all the games since Daggerfall and I can assure you that in Daggerfall:
1. Restoration existed with cure disease and restore health
2. Thaumaturgy spells are still in the game, just under new schools. They also make more sense in these new schools which, along with the creation of Conjuration, was probably why this entire spell book was removed: It made more sense.