Reddit went through similar issues a few months back (downtime, slowness, etc.), but they overcame these issues without turfing people. My guess is Digg pushed the engineering VP out to make the investors happy rather than to actually move forward.
How does it make investors happy? Why would investors care what kind of database you use?
by doing this, they are laying the blame on one person so the media can stop hating Digg and start hating the ex-VP of Engineering who "killed Digg".
of course, whether he was actually responsible in some way is something we may never know. for all we know he may have been completely against releasing v4 but was vetoed by Rose et al. or on the other hand he may have overpromised and under-delivered, putting the company in jeopardy, in which case he deserves to be let go.
it's all speculation until we hear an official comment from either side.