"Wallpaper and the "now-ugly icons" that "shake a little" are aesthetics and not functions."
Exactly, which means that we lost basic functionality for the benefit of silly aesthetics. I think we're kind of in agreement there.
"those of us who use our devices as something more that a reallly expensive digital photo frame"
It's a little sad to excuse enormously obvious blunders in a $700 device just because the device does more than show pictures. Why would you think to yourself that there should be some kind of "trade-off" when it comes to basic features? Think bigger! A $100 digital photo frame ought to work. A $700 iPad ought to work too. Some of us have higher standards in both aesthetics and functionality.
"If the wallpaper is set to the proper dimensions..."
If!?!?! Isn't it just comical that we're even discussing this? So now we need to take our pictures, put them on other devices, resize them according to specs that aren't posted anywhere, put them back on our other device and set it as the wallpaper?! I mean, this ridiculousness speaks for itself.
And none of the features you listed make it OK that they messed up on one of the the most basic and simple of features that literally stares the user in the face every day. You shouldn't be excusing it by listing a bunch of other unrelated new features. Any decent company doesn't try to excuse slip ups by distracting people from them - they step up and take pride in making things the way they should be.