Why is Google canceling Google Reader? Was it due to the redesign that gutted features?
It is surprising when a company wants to kill a popular product, and Google Reader certainly is a popular product. Lots of people are using it, and are rabid users of the service. But as I noted earlier, Google is planning to kill Reader in July 2013, and my response is to collect some requirements and look for an alternative to Google Reader. But a quick breeze through Google+ tells me there are many who are shocked and aghast that Google would do such a thing, and even looking to launch a petition to get Google to keep the service alive.
I think it's rather foolish to cling to tightly to the existence of anything, especially when that thing is owned by someone else, and that other person doesn't see value in keeping the thing alive.
In any case - there's a very interesting discussion on Quora titled Why is Google killing Google Reader? (with luck it'll be public) This discussion gives some great insight into why Reader's head is on the chopping block.
Going by an answer given by someone who identifies himself as the former Google Reader Product Manager, the reason behind Reader's death is: Several years of poaching members from the team to build OpenSocial, Google Buzz, and Google+. Secondly, there was a redesign of the Google Reader UI that ditched "sharing" features in favor of Google+.
That last point gutted the usefulness of Google Reader for some purposes. The loss of useful functionality meant the users wanted to go elsewhere, and usership dwindled.