Digg's design is not horrible. C'mon. They've won design awards with it and have millions of users. Hacker News has no design, which appeals to an audience that would love to think that code (a.k.a. content) is the only thing that matters in a business' success and that everything else is superfluous.
Digg's audience is more into fashion/style/cool stuff. So they should get some colors and a few gradients here and there.
I agree - digg has a fairly elegant design that's easy on the eye, without being obstructive. I don't think hacker news would suffer a great deal if a :little: more attention was paid to visual design. It doesn't really matter, I think people come here for the content, and that's fine.
Rater than comparing hn with digg, the comparison I saw somewhere was with http://www.newspond.com/ - an example of a site that looks nice (if you like gradients and glasy, round corners), at the expense of usability (only 3 posts per screen height etc). The first time I visited it, I was genuinely impressed by what they've archived, visually. But I've never been back since.
Digg's audience is more into fashion/style/cool stuff. So they should get some colors and a few gradients here and there.
I actually think Digg's design is very low-key.