True. One of my favorite parts of the earlier chapters were seeing what sorts of magic themes, and items he'd come up with. We don't see so much of that lately, which is why Magical Internet is total win.
I wouldn't directly pin Gerard as being the root of all problems, but just one of the results. As Mashima admitted all the way back in volume one, he didn't really know where the story was going as a whole. Based on how it was set up and what was covered in the time span, The Tower of Paradise is almost certainly the farthest point he may have planned out to.
Part of Mashima's writing style involves actually covering ground in each and every chapter, so he goes through 2-3 individual storylines in a year. This totally varies from our favorite comparison piece to Fairy Tail, One Piece, which can take several years to actually finish a single arc. This gives Oda a lot of time to actually plan what's going to come next, and continue providing really creative characters and scenarios.
Mashima doesn't have quite so much time because he moves at such a quick pace. He may come up with all sorts of cool ideas while working but not quite figure out how to string them all together right away. When the time comes, I'm guessing he just kind of shoves the ideas in and folds potential long-term plot points down into the current arc, or just springs the "twists" too soon.
Err. So it's my guess Fairy Tail is deteriorating because Mashima is going too fast and handles cases like Gerard poorly due to either a panic.