One argument I keep hearing in the debate about the Cataclysm raid changes is that there's nothing wrong with twenty-five-man raids dying out (if they do), because if they do then that's just a sign that they aren't enjoyable enough anyway and people are only doing them because the loot rewards "artificially" keep them interested.
The problem I see with this argument is that it tries to completely separate in-game rewards from the concept of having fun, which is simply absurd in my eyes. Almost every WoW activity worth mentioning gives rewards of some sort. If they didn't, if all of WoW was there to be played "just for fun" as some people call it, there'd be no levels, no experience, no items, no gear, no money, no achievements. We'd all just run around randomly slapping boars, do a bit of exploring until we've seen it all, gank a few lowbies of the opposite faction and then log off. That would be a very different game than what we have now, and personally I don't think it would be very fun. As it is, rewards and fun in WoW are closely connected. Most of the time getting rewards of some kind if simply part of the fun.
I agree that there has to be some kind of balance though, in regards to how large a part these rewards play. Before the introduction of the dungeon finder and before Blizzard started to hand out emblems like candy, fewer and fewer people were running instances, especially while levelling. Does that mean that instances were no fun and should have been removed from the game? Hell no! They were good content and oodles of fun. However, the effort of taking ages to put a group together was un-fun, and you could generally get better rewards by investing your time into something else. What did the clever people at Blizzard do? They completely automated the un-fun task of assembling a group so players wouldn't be bothered by it anymore and added massive extra rewards for running instances at the same time. Bam, suddenly they were popular again. And that's a good thing.
However, many would argue that Blizzard swung the pendulum too far into the other direction. At max level, running heroics every day is simply the easiest way to gear up now by far (if very time-consuming), so people continue to queue up for instances long after they actually stopped having fun in them, which obviously isn't great either. PvP was like this back in BC: many pieces of gear that could be bought with honour and arena points blew raid gear for dps classes out of the water, so raiders felt that they had to PvP in order to improve their raid performance, even if they hated it - which in turn ruined the experience for the genuine PvP enthusiasts, as they kept getting into Alterac Valleys where half the group just sat in the cave waiting for the honour to roll in, because they didn't actually care about the game at all, only about the rewards. I don't think I need to explain why this is bad too.
I think in the fun vs. rewards aspect raiding has been pretty well-balanced in this expansion. I don't think anyone who hated raiding felt forced to do it just for the gear. You can get pretty far just by queuing for a dungeon every day, collecting emblems and drops from the Icecrown heroics, without ever setting foot into a raid. And as far as the ten vs. twenty-five-man loot discrepancy goes at the moment, I viewed it as a reward for the large scale co-operation, in the same way that running five-mans gives better rewards than just soloing all the time (which is obviously more convenient than having to set aside some time to devote to a group without pause). Few people question that system it seems. The proposed changes for future raiding sound to me like the equivalent of giving out frost emblems for a solo daily quest. I bet that would hurt five-mans a lot too - except not quite as badly because finding four people who'd be willing to put up with the extra effort for no extra reward would still be easier than finding twenty-four of them.
Unbalancing the effort/reward ratio for what's a reasonably popular form of content doesn't tell us anything about the content itself, only about the effort and the reward involved. People rarely running instances was not a sign of instances being inherently un-fun, and people camping in the peace cave in AV was not a sign of battlegrounds being more fun than anything else, these things were just signs of something being out of whack. So if people suddenly stop twenty-five-man raids in Cataclysm (and I agree that it's not yet decided whether that will happen or not, even if I kind of suspect it will) that won't be evidence of large groups being inherently un-fun either, only of Blizzard either messing it up or intentionally stopping to support a certain style of play.