I firmly agree with people that the system needs an overhaul, I do not think it's perfect as is. However, my real time experience with people in general and guilds in ddo in particular make me believe that decay serves as an important incentive to welcome new players. Sure, older players move around from guild to guild, especially as the game ages and older guilds hemorrhage players to boredom, but new players are still the best source of new guild mates to make friends and have people to run things with. And finding a guild of players who know the answers to the questions, or the websites to help you get started learning out how to find your own answers, can really make the difference to a new player.
Also like anything else that is valuable, in the real world or the game world, there should always be incentive to work at it. You start a clubhouse for tennis players, and stop playing tennis for a while, the landlord isn't going to just say "Oh well, you're not playing tennis right now, we'll just leave it as you left it until you decide to play tennis again and you don't owe me anything". Guilds are the virtual clubhouses, where the data is 'rented' out by Turbine, and the currency we use to pay that rent is playing the game. We don't play the game, we lose perks. We come back after a long absence, and there are only one or two people active if that many, there is an incentive to attract new players to regain those perks. I think it's a good system, as long as they figure out a better balance that keeps people moving but doesn't cripple them. Or force people to choose between advancement and friends. Keeping people playing to retain their perks is good, excluding active players with limited time or resources to buy pots is bad.