Yep, I'm a former Digg user who left at the v4 launch because of this exact thing - they made ads indistinguishable from normal user posts.
People are saying this isn't that big a deal, that Reddit won't just die after this. The thing is, Digg still exists but it's a shadow if its former self and nobody cares about it. It's present, but its presence isn't relevant. This change is likely to push more of the users who submit quality content to Reddit away from it, degrading the site community even more than last year.