Successfully reproduced. Rough. Maybe they counted on people bailing out after attempting to trudge through the sloppy mess that is the newish Settings app before they even got to the Change wallpaper section, forgetting that there was another path.
Look at the state of Xcode, a tool that's fundamental to the iPhone's appeal. Every developer knows that this thing needs a massive rewrite. The word is that nobody within Apple even understands it thoroughly anymore, so it's way past time to strap it on and build a modern tool from the ground up that's maintainable, instead of slapping band-aids on Project Builder indefinitely. Come on, Apple, you can afford to throw resources at this for a year and just get it DONE.
Meanwhile, Apple is letting open, "urgent" QA personnel requisitions sit unfilled for YEARS. We can all see the results.
Data-point of one, but: the new Settings panel is very much appreciated by the non-technical users I support, because it approximates the iPhone settings panel they're accustomed to. Personally, I hate it, but I also like that my colleagues are better able to discover and make changes for themselves. I figure learning new tech is a core part of my job description (but not theirs), so my frustration counts for less than their comfort, so I suck it up.
Xcode, however? I completely agree with you there.