In my opinion Diego's problem is that he is not finding enough spaces he needs to run with the ball and do his magic. In Serie A, especially the 'smaller' teams focus mainly on the defense. Sometimes you can see that the opponent is defending with 9 men. That's why he has to have someone else beside him like Camoranesi and/or Giovinco which could give him a hand in that regard.
But all in all, you can't call this guy a flop. Every game it seems that he is getting used more and more of how Serie A teams defend.
Also he seems very good physically. I mean, he must be with all the tackles he receive ever single match.