Well, I think I know why they might remove it. (No, it is not because they are simplifying the game.)
Here are the reasons:
1. Quality > Quantity
Spell-making is essentially an oxymoron in Oblivion. You aren't CREATING spells, you are just customizing the basic effects of a basic spell, or combining spells together. Let's use fire damage spell as an example. You basically have the spell effect and the damage it does, the duration of the effect, and the area of the effect. You aren't making a new spell, you are manipulating the variables. When Todd said that it felt too "spreadsheet-y", he wasn't using PR talk. He has a perfectly valid point. Magic becomes less experimental, and more mathematical by calculating what would be most effective with as little magicka used. Magic should be something that is used through trial and error; not spreadsheets and formulas.
How this will make spells better:
If spellmaking is removed, we will have less generic effects like "fire damage for __ sec and __ feet on target". It will also let spells look more unique. For example, it has been confirmed that fire can ignite the environment. This is much better than the random explosion that comes from every generated fire spell.
2. Combining Spells
Combining spells from your left and right hand has already been confirmed. An example has been mentioned where a circle of protection was combined with a chain lightning spell that caused enemies to be shocked if they were to come close to you. This already sounds better than the combination of spells in Oblivion, which only combined the effects rather than creating a whole new effect. This is true spellmaking; not the manipulation of simple variables that we so inadvertently defend from Oblivion.
So, do you believe spell-making should return?