The primary intent of the new terminal was to to replace the small, antiquated terminal that was used since the 1940s -- no food or services of any type, or more importantly, restrooms beyond security; tiny waiting areas, etc. The airport commission even stated that the possibility of larger aircraft was dependent on supply and demand. Yes, they want more service, but it was not a "build it and they will come" scenario.
You summed it up very well I think. The holding areas had no bathrooms, and did not have enough seating. When multiple flights left at the same time, the terminal was quite crowded.
It was charming I think, but not that functional. And it was in the floodplain, which I think the new terminal has been raised.
I would have to agree that it seems the new space is not being used all that effectively. I don't think it was a case that they built a huge new terminal for traffic that didn't materialize. They built a new terminal which I expect was very expensive given the area, and then were hit with a traffic decline as flights were dropped and customers drove to alternate airports for lower fares.
edit: found in the article that the new terminal was $37 million. That's hardly a staggering amount for an airport terminal, much less in California. Certainly it is a concern that the airport is losing money.
I am wondering if there is space in the new baggage claim for at least one carousel. Maybe that was the plan and money ran short. In any case, a huge improvement over the former luggage claim tent.