Coming back to the new levels, I've been thinking more about this, and while I think yet more change is a bad thing, overall it is one of the few (probably the only) Gove policy that I have some sympathy with.
I look at it this way - GCSEs effectively have two functions - a levelling function, and a sorting function.
The levelling function - ie, showing that a person has a certain basic competence in maths, for example - they're pretty good at. As an employer, if I recruit someone with a C grade or higher in GCSE, I can be pretty sure that they'll be able to do the (basic) maths they'll need at work. Similarly, as I understand it, if a pupil has A or A* maths, the likelihood is that they'll be able to cope with A levels.
The sorting function is mostly relevant for high end employers / universities. Not 'is this person competent to a certain level', but 'is this person the best of their cohort. O levels were much better at this, both because much fewer people got high grades, and also because they were graded on a percentage basis (so you couldn't get the situation where 50% got A or A*).
By 'stretching' the available grade options, you should hopefully keep the levelling function (people will soon figure out if they need a grade 4, 5 or whatever to be equivalent to an old C), but improve the sorting function.