It was for the best - they've lost to Team Hell No so many times that their credibility was falling apart quickly, and I have no idea where they could've gone as a team at this point, so this, in my opinion, was the only choice left. Yes, they could've been good in the tag team division, and it seems like WWE thought that too, but eventually just gave up on the idea.
This is a positive thing, though. Damien Sandow has been one of the hottest midcard heels since his debut, playing his character excellently and getting HUGE rubs by being involved in promos with DX and The Rock. I don't want him in the tag team division. A singles career is the best thing for him right now and I certainly hope that his push continues, with possibly even a World Title run in a few years time. No problems with how Sandow's being handled.
Cody Rhodes is a different case. I haven't seen a lot of good from him in the last few months. Getting squashed in most of his matches (including a submission loss to Daniel Bryan in under two minutes) wasn't helping him and now it looks like he's completely got nothing to do. I can see two ways in which he can go: A Wrestlemania feud with Goldust, which so many people have been talking about, or possibly even a face turn. With Jack Swagger, the only rumoured challenger to Antonio Cesaro's US Title, back as a heel, why not put Cody in that place? Cody Rhodes vs. Antonio Cesaro at Wrestlemania for the US Championship isn't at all bad. Releasing Cody Rhodes is not something that I can see WWE doing. He is the son of a legend, after all.
Honestly, I can say that I won't miss Team Rhodes Scholars.