... So then even when the difficulty is at retarded proportions, the productivity won't necessarily have to decrease?
When total network was 1GHash/sec a block took 10 minutes, same as now. The whole point of difficulty is to keep productivity the same.
Were blocks worth more than 50 BTC back then? I remember reading in that one thread about the guy who bought two pizzas for 10,000 BTC that he was generating "a few thousand" bitcoins per day.