Um, there are a ton of Google Reader replacements out there doing incredibly well in the wake of that announcement. Digg deciding to create their own product from scratch seems very stupid.
They gotta build the system as fast as possible, though. I get that they're building the system from scratch, but by the time Google Reader is actually shut down, most people will settle down with other products.
There's definitely space here.
Don't get me wrong, I'm not saying they will succeed at this, but I don't see the justification for calling the move "very stupid".
If they actually do a good job with it? This could be huge. Regardless, their product will do well.