The Billups trade hurt, but the real problem has been fucking idiot Michael Curry. He has zero understanding of Xs and Os, is completely incapable of making in-game adjustments, and wouldn't know a consistent rotation if it bit him on the ass. They've been getting positively mauled in fourth quarters recently and the blame for that has to fall squarely on the shoulders of the coach. With Billups the team probably could have coasted to ~50 wins based on pure chemistry and familiarity, but they were never going to get far in the playoffs with Curry at the helm.
The team had to be blown up at some point; they had a good run, but their time had passed. The Iverson trade hasn't worked out as well in the short-term as I would have liked, but it does put them in a fairly good position to undertake a full-scale rebuilding. I just hope Dumars puts all that cap-space to good use.