"Was VATS nerfed too Much in FNV?"
Dunno, didn't use it enough to find out. Obsidian improved iron sights and non-VATS shooting so much I rarely touch VATS. :shrug:
I like VATS ok, in both 3 and NV... but since they vastly improved free-aiming in NV, I use it far less than I used to. There's just something about lining up the carbine's crosshairs on the sternum of a Fiend, taking a half-breath, and gently squeezing the mouse (hehe), then watching the bloody mist envelope them as the .44 slug sends them [censored] over teakettle... all in realtime through my scope- that I seldom get via the klunky, borked-up cinematics that VATS usually dishes out.
As others have said, the VATS percentage-to-hit chance at anything but relatively close ranges svcks eggs, even for long ranged scoped rifles. It's stupid that even a half-blind boyscout could usually hit a nice fat target standing upright with most any rifle at 50 yards... yet in VATS, your world-class expert sniper with the best weapon known to man is lucky to get a 50% chance to hit them... mhmm, right.... so I usually just ignore VATS anymore unless multiple mobs get within chew-spittin' distance, then pop it up to finish them off with.
VATS is handy for getting off your first grenade toss though, to start the fight with. One thing I've never mastered is getting those stupid pineapples to end up anywhere near where I want them to explode, throwing freehand. VATS is miles better at getting an effective grenade hit in, than I am.
When I do use VATS in combat, against multiple mobs, I'll almost always start off with freehand shots- because I'm more likely to score a hit and get a kill (or 2 or 3 of them, if I'm lucky), and because it saves my VATS AP for taking out the survivors that manage to get closer in, which is where VATS actually earns its keep. When I try to start out the fight using VATS at moderate to longer ranges, I'll often as not end up with only one kill (or none, if VATS so chooses), no AP left, and a gaggle of ticked off varmints gnawing on my cojones while I frantically try to melee them with a rifle.