V4 was definitely the tipping point and nail in the coffin for Digg. However, once the Digg community became to large it became difficult to find interesting stories about a particular topic. At the same time twitter, hacker news and many of the sub-reddits became great ways to discover unique content.
So a combination of poor product design, a selling out the Digg community and availability of alternatives killed Digg.
I would argue that the "big break" was actually a bad thing for Reddit. The massive influx of disenfranchised Digg users contributed to the decline of quality on Reddit big-time.
reddit's quality is in renascence currently, as the big and popular subreddits (e.g. pics, science) have figured out what the 'moderate' button does. until every single one of the default subreddits start moderating, the main reddit will be rubbish.
They redesigned the site in a visually unappealing way and allowed news sources to auto submit content. Overnight, it became this ugly site where the only links were auto-submitted stories from popular newspapers, cable news, and other mainstream media. See this story for more: http://searchengineland.com/digg-v4-how-to-successfully-kill...