stopping through-running to Liverpool Street allowed, amongst other things, Ipswich-Cambridge to go to mainly two-car 170s (from 156s and 153s), Norwich - Cambridge to go to three car 170s all day and other train length (and I think frequency?) upgrades. Also meant not having three car DMUs taking up paths in/out of Liverpool Street better utilised by 4-12 car EMUs/8 & 9 car LCHS trains.
Yes lots of improvements. The through Harwich service was also cut back to a Manningtree - Harwich service as that could only run as a 4 car and was overcrowded at some times of the day between Colchester and London. The 21.00 Liverpool St to Lowestoft in particular was a train to avoid too - 3 car 170 and hopelessly overcrowded. Now a proper 90/DVT set to Norwich with a connection for Lowestoft at Ipswich.
The Olympics was the perfect reason to remove these short trains from the London end of the route. Re-writing the timetable for December 2010 gave 18 months of practice of the new timetable before the Games. Running EMUs to Ipswich, Clacton, Colchester and Braintree means that trains can be 4, 8 or 12 cars as appropriate, without having to alter the public timetable. Very handy for events like the V festival at Chelmsford.
When the through 170 timetable was introduced it would have resulted in a big reduction of drivers diagrams at Colchester, and too many diagrams at Ipswich. Colchester drivers did not sign 170s then. Rather than face the huge cost of having to re-locate drivers (not many of whom would have wanted to move anyway) it was decided to teach a small number of Colchester drivers class 170s and the route to Peterborough. Like this the number of diagrams at each depot remained similar.
Today's service is a legacy of that decision as Colchester drivers still sign 170s and work the Peterborough trains that run through to Colchester (The 19.45 from Peterborough also runs to Colchester), while some Ipswich drivers now sign 321s. It all gives greater flexibility.
Hope that lot explains a bit of the history.