The Kevin Butler ads were detrimental to advertising PlayStation games anyway. It brought awareness back to platform, but the ads for games that featured him became all about Butler, not the game. And I think the later ads basically became a platform for the Kevin Butler character and even the PlayStation branded element weakened in the light of his popularity.
Was it the Resistance 3 ad that featured him riding a horse and talking in his distracting, over-the-top manner? Yeah, not a good idea when trying to sell a game. He was best used as a short term thing an maybe someone you brought back when you needed him (Kevin Butler could have had a good campaign for Vita, no doubt), not something that was stuffed down the throats of viewers like he was.
It's weird to say, but Sony's probably better off without him, provided they can make a solid image for themselves with their new ad firm. This whole deal with the lawsuit has been pretty silly from day one, though, and it's not doing any favors for Sony in the short term to get rid of their most effective ad campaign in years.