The fact that Holy Priests are so well-rounded means that in situations where only one Healer is needed (such as 5-man groups), Priests are fantastic. They have all of the tools required to excel in that format. There's not really a single boss that can give them a lot of trouble. All of the Healing classes have the tools required to get them through 5-man dungeons and Heroics, but Paladins, Shaman and Druids all have encounters that really trip them up. Priests rarely have this problem. 5-mans are kind of their playground. They utterly dominate.
Problems start coming up when you increase the number of characters in play. Things start shifting from who has the most tools to "Who will heal the tank?" and "Who will heal the DPS?" In bigger raids. You stop looking for versatility and start looking for who's the best at what job.
Priests have Renew, but they're not the Healer you look for when you want HoTs for your 25-man. Priests are strong single target healers, but Paladins are the best in that role. Priests carved their niche in the raid healing department with Circle of Healing, right alongside Resto Shaman. Despite that, I think we all need to admit that Circle of Healing was pretty cheesy and something had to change with it, like is happening in patch 3.0.8.
This leaves Priests in the role of, "The guy that handles everything else." That's pretty lame, and to try and explain why that's lame, let's paint a picture. Let's imagine you're sitting at the dinner table at Christmas, and your relatives are all over and digging into the ham. It's family bonding time, and Grandma is asking questions as usual. Ugh. Grandma looks over at your cousin, "So what is it you do again?"
He gets this great big grin on his face and says, "I'm a Healer. I'm the guy that rolls HoTs."
She asks your brother the same question, naturally. He says, "I'm a Healer, too. I'm the guy that keeps the Tanks up."
Grandma casts her gaze upon you. Moment of truth. "What about you, dear?" she asks.
You mumble under your breath, "Yeah. I heal too."
"Oh! The whole family, wonderful! What do you heal?" she presses the subject, much to your irritation.
"Well, I... guess you could say I heal a little bit of everything, heh heh."
"Ah," she says, and goes no further. There's a brief, awkward silence. It only lasts a few seconds, but it feels like an eternity.
It's broken by your mother's voice, and you're warmed by her smile. She speaks with a kind, and caring tone. "He's very good at what he does, you know."
"Mhm," Grandma replies, "I'm sure."
And it's all downhill from there. That is the Priest's Christmas dinner. It's a blow to the ego.
So... Priests are sort of in limbo as far as nichedom goes. This doesn't mean they're not wanted in raids, not a chance. They're still a great, great option for 10-man raids, and they're still fantastic Healers in 25-man raids. The issue is that you fill your niche roles first, and plug in the Priest(s) second. Well, assuming you're building a raid from scratch and not just taking your guild somewhere. That's a different situation.
Again, this is a problem more or less exclusive to 25-man raids. 5s and 10s aren't at all an issue.
So, let's pretend we all agree that the Circle of Healing nerf was called for. Even if you don't think so, let's play along for a moment. What can be done to give Priests that raid niche they need? There are a lot of possibilities, but let's stay simple.
Prayer of Healing could become a cross-party smart heal, for one. If you tuned the numbers to neither overshadow nor be overshadowed by Chain Heal, it could even play out to be a pretty decent rotation when combined with the new Circle of Healing on AOE heavy fights. Prayer of Healing, Prayer of Healing, Circle of Healing, Repeat. It's not an ideal playstyle, but mashing two buttons is infinitely more fun than mashing one like before.
The more complicated solution is to find a new niche for the class. Jack of all Trades is the name of the game right now, and the 'master of none' bit comes with that territory. All of the current trades already have their masters, so if you don't want to start unneeded competition, start another trade. Discipline is the closest we get to that, and Discipline has come a really long way in Wrath of the Lich King, but in practice it's not really going to work out.
The emphasis on the shields still encroaches on the 'single target healing' niche, because you're not just slinging shields. Your single target healing is supported by your shields, and not vice versa. If that were the case, it would be a pretty new way of Healing, but it isn't and I don't know if that's possible while keeping a game like World of Warcraft balanced. If absorption was that powerful, PvP would be absurd and it might cause issues with other healers. It would take a whole lot of fine tuning, but really, what doesn't in WoW?
Another alternative would be to take the 'utility healer' thing and run with it. Take concepts like Power Infusion and build upon them. Make Priests the Healer class that empowers their allies in very direct, active ways. Give them the ability to empower one of your DPS enough to justify bringing a Healer that doesn't match the raw healing power of the other Healers. If you can boost a Mage's DPS by 25% (I pulled that number out of my rear) by pairing them up with a Priest, you're suddenly going to have people begging and pleading for you to bring a Priest on your raid. Using the Hymns concept to experiment with this would be interesting, I think. Multiple high-strength cooldowns, but they share a cooldown. You empower a caster, or another healer, or... you get the picture. Make it a choice. This also givees Priests something with a limited stackability factor, which is needed.
Is that large of a shift possible for the class? Maybe, but probably not something you'd see in a patch one day. It's all just a pipedream. My goal in all of this is just to fuel a little conversation on the topic. Those are things that I think would help the issue of Priests having no niche. I might think my ideas are awesome, but that doesn't mean it would fix the problem, and the problem may not even be a problem in practice, just in theory. We'll see what happens, won't we? What are your thoughts?
Again, let me make it clear that I don't think Priests are a bad class. They're pretty awesome. They've always been awesome, and they always will be awesome. They perform well in raids, and they make raids go smoother than they would've been without one. My only goal here was to try and explain why Priests might feel down on themselves.
Psst, Ghostcrawler, if you use any of these, you know how to get in touch. Wink wink, nudge nudge!