Diving is a blemish on the game, plain and simple. It's a difficult issue though because so many players dive yet those same players would say that there's no part of diving in the game.
The bad thing is, diving works. Players dive and continue to dive because it helps them get calls.
Now, this isn't something new of course. As this video points out, diving has been going on for quite some time now. It's not an epidemic that began recently, which only makes diving more troublesome and more difficult to stamp out.
This video clip is a great bit of commentary and analysis. It's about 15 minutes long but well worth it.
Gary Neville gives his thoughts on diving and is pretty much spot on.