Capcom lowered and toned down the damage, which really wasn't the "huge" problem...it was all of the garbage options everyone kept having with the utilization of Ultra's that was the problem. Sagat doing "high damage" is not the problem...it's the fact that Sagat can go into so many stupid options with his Ultra that was the problem. Again, I don't mind Sagat being powerful hit for hit, he's slow as a turtle, terrible footsie game, is a gigantic walking hit-box, needs to rely upon zoning, and pure raw damage, however the trump card is because when that meter is full that really makes him as stupid as he was.
So you see, you tone down "damage" but allow him to keep basically 95% of all the stuff he could still do with his Ultra and it isn't going to change it much, the only difference here is that you'll be eating "more" Ultra's per round then basically from SF:IV, in example, as I stated, you'll rely even more upon Ultra's now then you ever did in the game of SF:IV. To me, well, at least in theory could "potentially" make things worse in a match up stand point. Simply because you are leaving all of the Ultra Setups in, however what about the characters who can't effectively land Ultra's? Take Guile for example, almost no real buffs, besides a few minuscule ones, cannot really land Ultra consistently, but he also suffers from the damage nerf.
How does that improve his odds with say, against a character like Ryu? To me, this match up for Guile will be just as bad, if not possibly worse due to the fact that Guile's damage output is nerfed, however with no real effective way to land his Ultra, he'll suffer the same fate he did in SF:IV. Sonic Boom in SF:IV did absolutely laughable damage, however in here the damage reduction will make it Pee-Wee Level. Ryu on the other hand although receiving the damage reduction as well, he still however has tremendous pay off potential simply because his Ultra will have the 20 million ways to land, minus one option with the Shoryuken trade off. Yes, I know, the excellent Logic there is astounding.
Why the need to again really improve footsie games for Ryu when you still have SrkxxFADCxxUltra, especially more so then in SF:IV, because with the damage reduction, doing damage with footsie games will pale even more in comparison to landing one of those babies. For me, I just want to rip the hair off my head with what Capcom is doing, yes, SSF:IV looks great, but man, they could have done 100x better on the approach of the Ultra System.
I honestly believed that after SF:IV, Capcom would have said "Let's tweak the Ultra System so that it can just be a slight influence instead of being a nearly direct influence"...nope, they basically band aid it with "Well, we'll just tone the damage down, take out 10% of the setups into it and it should be better now".
That's like Tekken 6 to Tekken 6 :BR...yeah, in the upgrade of BR you do less damage...but all of the stupid bs with the juggles+Bound is nearly all there, so umm...how is that a significant improvement in the strategy department? Basically none, and it just means you'll have to juggle+bound even more so to win now, however that'll get "high praise" for improvement, trust me, you'll see alot of people saying that BR is "soo much" better, but strategically it didn't even flinch. SF:IV to SSF:IV will look to follow suit (although not as dumb down as T6 is).
So if your playing someone like Guile, look to cry again, I know my brother will. To me, there are good characters in SF:IV who didn't rely upon Ultra's, however due to Ultra's being in there, this shifts matches too easily with those "one-move" wonders as I like to call them. Take for example a character like Chunli, fundamentally she's great in SF:IV, however with an Ultra that isn't as reliable as the characters above her, she struggles greatly against them due to those very factors.
A great character like Ryu is again fundamentally well made, however with him being one of the few who could utilize the Universal Options to its maximum potential, this completely shifts to his advantage on great lengths. Gouki is potentially the only character who can literally dominate without ever to having throw out his Ultra once, and that's simply because his gameplay design helps him to such an extent that he can do so.
I feel that SSF:IV will be the same, and "possibly" (<--- again, theory only, so that means not 100% sure) worse in contrast to how you approach a match up with more reliance upon Ultra Setups now. That's just the worse, and to me in SSF:IV even more so then SF:IV you will build the majority of your strategy, match ups, as well as a decision of losing out completely on a SINGLE extremely powerful and influential Universal System.
SF will be super strategical again when it's more of the tools of the characters that influence 95% of the match ups then "well, since he can't Ultra that good, he'll only be solid, but not great". Remember, write that down, I'm calling it now, majority of the best characters in SSF:IV will derive there because one of if not the biggest point is their effectiveness w/ the Universal Option. So when you watch those vids or what not, and wonder "Omgosh, *Insert name* is so cheap because he/she can drain your life with one mistake. You need to realize that they should nerf or improve the real problem, and you'll see a significant difference in a good way.
To me, it would be so much more interesting if Ryu was top-tier mainly because dominant footsies, zoning, great AA were the absolute largest factors into his placement, not all of those written in small 1 font caps with the FADCxxUltra in 60 font and bolded.