... there is no good reason any more to have that 'generate' feature in GUI client ... It has served it's purpose, now it's time to retire it.
Strongly agree.
The CPU miner in the client is almost entirely useless. Even if people do really want a CPU miner, it could easily be separated from the client and made to use the getwork API.
Having the "generate" feature in the client gives new users the impression that mining is the primary way to get bitcoins. I've seen multiple instances in which people say "this bitcoin thing sucks, mining is too hard, how can I ever get any bitcoins". Then it has to be explained to them that bitcoin is a currency to be obtained by trading goods and services, and sometimes they don't seem convinced.
It may be better for Bitcoin if we give normal users the impression that bitcoins are a currency to be bought and sold, and we leave the mining to the enthusiasts and people interested in maintaining the network. At the moment there are users who see bitcoins as just a "collector's item" for people with good CPUs/GPUs. (I actually saw this phrase used in a Slashdot comment).