Spaces was meant for the old PC universe - for a large screen that could support multiple projects and platforms, with maximum user control over layout.
The new iOS universe is not only much simpler, but it is less user dependent - and it is based on the one dimensional linear screen flow of the iPhone/iPad.
The user must be re-educated to live in this space. If it cannot work on the iPhone, than it will be phased out.
Welcome to the future.
Yes, that's like saying that all cars should be like motorized shopping trolleys (the ones that old fat people use in Walmart). Who needs to go fast with big, comfortable cars? Now it's all about underpowered gadgets, let's also make full-powered cars run slower to be the same!
The iOS universe is for CASUAL use. I can't use my iPod Touch or an iPad to do serious work. It's not immersive or comfortable. Try do edit a 2-hour movie on an iPhone or iPad. Try to edit 3000 large format digital pictures in Photoshop on an iPad. You can't. Because there's no workflow.
Spaces made hardcore organizing easy. Sure it wasn't perfect, but Mission Control has way more bugs and is way worse in terms of flexibility and usefulness. With MC, I can't drag windows from any space to any other space. For people working with 20 open apps with loads of windows, you have to do that.
Sure, for casual grannies who are fine with iPads, Lion is great. But then get an iPad, it's cheaper and cooler. Why get a computer then? If you want serious work, get a computer. And expect it to work like a computer. That means a nonlinear approach. It allows you to use your brain and organize things in a visual way. A linear approach is less visual, especially with the tiny thumbnails. Perfect for stupid people.
However, I don't want to feel stupid...