This is such a stupid move that it's almost unbelievable. I get that the newspaper business needs to try different things to reduce costs but this would definitely not work. There is a reason why photojournalism is separate from news writing. Reporters, when they look at something, have to detach themselves away from the scene and get the facts and dig for details. Photojournalists, on the other hand, have to feel the atmosphere and take the right picture that conveys that. Articles should be objective. Photos should be engaging. By firing its photo staff, Chicago Sun-Times is actually shooting itself in the foot. It's more common for readers in social media to share pictures instead of lengthy articles. Photos attract readership in the Internet, which is obviously a possible revenue-generating avenue for the business. When the Sandy Hook shooting took place, there was no article that went 'viral'. But a photo of a responder leading a kids away from the school did. That's because it conveyed the perfect emotion of the situation on the ground and the readers felt that. An iPhone picture taken by an objective reporter can't do that.
Besides the obvious fact that good photography is hard, and that you can't just give a reporter a few lectures and a phone without noticeably worse results, I think you're spot on with this: I think now more than ever it is essential that newspapers absolutely nail their content creation, and be firing on all cylinders, -especially visual. When you take into account that newspapers are being attacked by users who prefer more pictures and less lengthy articles divided up into smaller and smaller bits for easier consumption, this just seems like a bad play as you said.Reporters, when they look at something, have to detach themselves away from the scene and get the facts and dig for details. Photojournalists, on the other hand, have to feel the atmosphere and take the right picture that conveys that. Articles should be objective. Photos should be engaging.