The problem is not that the software is old: software, indeed, does not rot. The problem is that the core protocol is old, imposes restrictions that cannot be avoided (e.g. slow startup due to multiple roundtrips) and 90% of it (probably more actually) is unused by everything you run, unless you really like running old Xaw-based paint programs. The protocol was very well-designed for its time, but its time was when PostScript was new: the designers couldn't foresee what was coming in graphics card design twenty years down the road. That sort of thing cannot be fixed without breaking protocol compatibility, by which point you're talking breaking every X app anyway. So why not try something quite different?
(I still think that a display protocol was a very important innovation and that making drawing direct to the framebuffer the core operation is a huge step back. But, hey, I'm not writing the code.)