Social news aggregator site Digg did a good job last week of unveiling a new look and adding back some features it had removed prior to version 4, but the company still has a long way to go before it finally erases all of the mistakes it has made.

The site became legendary among largely teen and college-age male users who perused the site for the latest in bizarre, tech and political news. So many millions of people visited Digg that domains appearing on Digg’s front page received hundreds of thousands of unique visit referrals. Large publishers like Sports Illustrated, AOL, Newsweek and others expressed interest in hiring Digg power users to promote their stories in order to get traffic. In September of 2008 Digg announced a $28.7 million round of funding with Highland Capital Partners.

But towards the end of August 2010, things took a sharp turn for the worse. Founder Kevin Rose attempted to change not only the look of the site, but how it was navigated and how stories were promoted, all at once. The changes were not received well. Longtime users and even more casual ones left the site in droves, heading for rival news aggregator Reddit. Digg laid off 37% of its staff, and Rose stepped down as CEO.

In an attempt to get people to spend more time on the site, Digg has now added back user profiles on submission pages, as well as popular story stats. It’s simplified and cleaned up the look of the site and has made special efforts to converse with dozens of heavy users in order to fix perceived problems. I’ve attended a session with staff, and I have to stay I’m impressed with their professionalism and desire to live up to Digg’s great legacy, which despite past mistakes, is a proud one. Their openness about their problems, frustrations and future plans is a bright ray of hope as far as I’m concerned. New CEO Matt Williams (pictured) is an impressive guy, and I think he stands a chance at turning the site around.

But the company still faces major obstacles and will need to make some adjustments if it wants rebuild the community it once had. Reddit made a big deal recently of the fact that its 13.7 million unique visitors in January clicked on the site one billion times. Williams says that Digg had more than 20 million unique visitors that same month but saw a much smaller number of page views. This is for several reasons, but perhaps the biggest one is that the front page starts and stops like a broken car.

Most evenings, and especially on weekends, the Digg crew somehow thinks it’s in their best interest to essentially turn off movement on the front page and stop story promotion. Whether this occurs because everyone went home or because interesting things stop happening on planet Earth, I don’t know. But Digg takes on a desolate appearance during these incidents. People who make more than one visit to the site during the course of day are presented with the same old news they saw during their first visit. Maybe Digg is promoting fewer items to its front page so that the referral traffic sent to sites will be larger and Digg can maintain it’s image as a heavy referrer? The problem is, Digg is destroying its once-solid reputation as a vital place for fresh content in order to do this.

What should Digg do? Keep its front page moving, that’s what. During peak-time on a regular day, staff typically allows about two hours’ worth of promoted stories onto the front page. It’s totally reasonable to allow that span to lengthen a bit at night. But it shouldn’t extend too many hours longer than that. On the weekends there should generally be fewer stories that hit, but not to the point where the site freezes content-wise, as it often does. This means someone needs to be manning the ship most of the time so that spam does not make it to the front page, but Digg should be able to handle that cost if it’s serious about bringing the community back to the site.

I can talk all day about Digg’s other problems. Some of them are huge. Search on the site is broken. Regular users have no simple and convenient way to discover all the stories from sites like, say, Physorg or Cracked that hit Digg’s front page recently. I could write an entirely separate article about how the “My News” section of the site isn’t relevant to many users. I could rail for a while about how the staff doesn’t have good news judgment and struggles at times to pick appropriate front page stories. I think they should scrap the staff picks and instead bring back the “trending story” feature that became so popular last year and actually brought a sense of “now” to the front page. Digg also needs to build ways for users to communicate with each other while on the site rather than having to rely on third-party services like Twitter, Facebook, Google chat or AOL Instant Messaging.

These are all important issues, but they still pale in comparison to that inactive front page. It doesn’t matter if the activity isn’t really there. Get the front page moving and keep it that way!