they seem to have identified most of the problems with their PVP system (area/world pvp notwithstanding), but I'll still hold my breath on them actually creating a viable solution.
We're not killing off Arenas, nor do we regret introducing them. (Rob said in an interview once that we regretted *how* we introduced them. Big difference.)
Part of the problem with how we introduced Arena was we offered extremely powerful rewards that were available relatively easily. Everyone I know participated in Arena at the start of BC. Were they having fun? Several of them weren't. But they figured the had to do it to stay competitive. In fact, in BC the PvP rewards were so easy and required such little time per week to get that they threatened to divert a lot of players from raiding to get epics.
Flash forward to Lich King. We made it harder, in that it took more actual wins, to earn great PvP rewards. At the same time, we made raiding much more accessible. This got a lot of the players who didn't want to participate in Arenas out of there. But it wasn't enough. We still had a lot of players who liked PvP and / or didn't enjoy raiding who still felt like Arenas were there only avenue to great gear. Unfortunately, if they weren't that good, or if they picked a spec that wasn't that good, or they picked a comp that wasn't that good, then they were just spinning their wheels since we no longer offered them great rewards for just losing matches each week.
The idea behind rated BGs is to be able to offer the best PvP rewards through both Arenas or BGs. If you love BGs but don't like Arenas, you can still get great rewards. If you love Arenas, hopefully the experience will be even better for you because the guys who don't like Arenas will be off doing something else. If you like both Arenas and BGs, great, you have more choices in what you do that week. If you like PvP but still lose a lot, yes you're still going to be a season behind the guys who win a lot. We'll reward you gear just for participating, but if you want th best gear, you still need to win. (Source)