That's not why spellmaking was removed. They removed it because they didn't like how it worked in past games and they didn't want to implement it in Skyrim if they couldn't come up with a better system. And they couldn't, or they didn't want to devote time to it. I actually agree with them. I would love to see an improved spell making system either in DLC or in the next ES game, but I never used it in Oblivion because I thought it was lame unless I was [censored] around.
They removed it because: "Our devs worked hard on the default spells."
That's from the most recent info received today, and the official reason for spellmakings removal.
More likely, they removed it because they couldn't figure out how to combine the visuals in a way that didn't look crappy. (ie, Spellmaking let's you combine any effect, and certain visuals would look bad combined. Or perhaps it lagged the crap outta the consoles, etc,. They are pushing them hard as it is.)
As for being useless, how did you ppl ever play TES and not make custom spells, etc,. ?
If you didn't play mages, fine, but if you were playing mages using stock spells, you were a crappy mage. Had TES been online, and not SP, you would have gotten destroyed by other players, and quickly learned how effective spellmaking truly was.
Whether you liked it or not, it was extremely useful for those who knew how to utilize it.
I only hope that the new system is more flexible than we give it credit for, but as mentioned, even simple things like "Water Walking on Touch", may not be possible anymore.
They really need to release an in depth explanation of what this new system can really do.