I'm of two minds on this.
On the one hand, I think that all passengers arriving in NY deserve a better experience than the current rat-maze that is Penn Station. In fact, I'd be willing to argue that commuters deserve better facilities (in terms of layout, good design, etc.) even MORE than the long distance passenger. After all, if you're a daily commuter you're making use of a station like GCT or Penn or Hoboken two times a day, five days a week, fifty-odd weeks a year. Any improvements, on the margin, are better than the current situation: and the Farley building would make a grand gateway for the city.
On the other hand, at the actual track level, Penn Station is clearly inadequate for the current day. The fact is that when the Pennsy built the North River tubes, they never really envisioned Penn as a station for commuters coming in across the Hudson River. Remember, when it was designed in ca. 1905, the bulk of the Manhattan office district was far to the south-- around Union Square and below Canal Street. Actually, as late as the 1950's there was little midtown office space aside from the streets immediately adjacent to GCT, the Empire State Building and Rockefeller Center. And for commuters heading from Jersey to lower Manhattan, it was far preferable to come into one of the waterfront stations (NYC Weehawken, DL&W Hoboken, ERIE Jersey City, CNJ Jersey City, PRR Jersey City) and transfer for the ferry or the Hudson & Manhattan tubes than it was to go to midtown and then cut back south on the IRT or IND.
Writing the sentence above really made me realize the problem here. The various players are trying to get back to pre-1950 service levels, but instead of working with 6 mainline terminals, they're trying to squeeze everything into 2.
I guess my conclusion is that the THE tunnel scheme, while flawed, is necessary. The Farley, though, may wind up being a stopgap, like the 1890's remodeling of the Grand Central Depot that produced the old Grand Central Station (the one immediately prior to the current 1913 incarnation). Perhaps with Cablevision spinning out their Madison Square Garden assets, one of the obstacles to a really full reconstruction of the current site will be removed.