Good point that the users are the product...and no one would assume that you could keep customers happy without paying attention to your product, although I must say that Digg is doing a pretty decent job of responding to user concerns and clearly communicating the order that they will be implementing changes. I have noticed far fewer 'broken axles' and now everyone will be watching to see how quickly they implement features from v3 that everyone is clamoring for.
So Digg might in fact be doing right by their customers in this case. They're certainly bringing in more money than Reddit.