The show's main selling point had always been that it was funny. When the show got uncancelled in 2008, it wasn't
as funny, though Season 6 was still decent and Poof was probably the only good new character.
Season 7 is when the show largely began to rely on stupid gimmicks and getting rid of old characters (crazy characterization being one of the show's best sources of humor). Since they left Timmy's Dad and Crocker to provide a massive chunk of the humor after dropping so much of the supporting cast, both became stale and wore out their welcomes. Even Cosmo was starting to lose his touch. Then Season 9 came along and they had to add Sparky, who is easily the most unfunny character on the show. Chloe wasn't much better, and (along with drastic flanderization) a large contributing factor as to why the show got cancelled for good after Season 10.
I miss the days when there was a multitude of hilarious characters like Chester, Veronica, Catman, Mark Chang, etc.
tl;dr, the show is defined by being funny, and its decline is because it stopped being funny.
Put this in your signature if you want an open-world Pokemon game.