I think the money boost from Stuttgart was essentially requested to offset the championship money that the team loses moving from 4th to 5th/6th, perhaps with a little extra.
The team's woes are actually very interesting. Brawn recently announced that they haven't kept up with aerodynamic development of the other teams. "Well duh!" seems to be most people's responses, but in a way I can understand how it happened. Firstly, earlier in the season Brawn pointed to the qualifying pace of the car as an indication that aerodynamically the car is sound (
source)
Ross Brawn, April 2012 wrote:...our qualifying speed tells us that the fundamentals of performance are there: you can't do the lap times if you don't have enough downforce, horsepower or a good chassis.
i.e. Mercedes knew their race pace was afflicted by tyre issues, so were judging their aero performance by qualification only.
Secondly, mid-season there were quite a few races which had wet fridays and/or wet qualifying. In these sessions Schumacher managed with his wet-driving expertise to put the car in similarly high qualifying positions as the car achieved in its early season qualifying dominance: Germany 4th, Silverstone 3rd. In reality, I would wager that the dry qualy pace was already well into its tumble, certainly the shine was not present any more in the dry qualification in valencia just a few weeks before (a track that the W03 was expected to do well at).
The true extent of the problem was probably only beginning to be appreciated in Hungary, when both cars failed for the first time to enter Q3, and it became apparent that there were severe consequences to their strategy of dropping downforce levels to try and improve balance and tyre handling, with extremely poor performance with big understeer through the long slow corner.
I think after that it's merely been a case of damage limitation. Their 60% WT upgrade will have been sanctioned well before their qualification achievement dropped off (and hence well before they realised they were actually in aerodynamic deficit), and I actually think their adoption of the Coanda exhaust was a bit more out of desperation than anything else - perhaps also a realisation that they needed to understand what has become the pitlane concensus for exhaust solution before the winter break.
The most surprising thing for me is that they have failed to substantially improve their performance with their new exhaust, despite being several races with its use. Brawn stated that several other teams took 4-5 races before they were properly using the exhaust, so perhaps then we might expect improvements in the last couple races?
Either way, I think at Brackley they were caught trying to take an easy route, thinking that they could give up what has been the primary way to improve performance for the past 25 odd years: aerodynamics. In truth, they should have known better that in F1 you have to run even just to keep still.
