Has the average level of intelligence went down?

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I was going to say the same that Callista already said: IQ as measured by tests rises by about 10 points every generation. I can't remember whether there is any scientific explanation for this though, and am too lazy to look it up in my psych book.

The question should read: Has average intelligence gone down?

You're ignoring that older generations make up in experience what they lack in raw puzzle-solving power. It's like the 19 year old college basketball player, just new to the game, peak of physical endurance, compared to the 35 year old pro who's learned all the tricks but doesn't have the sheer strength and speed of the younger guy. Grandma's generation may weigh in below average on modern IQ tests and suck at using computers, but she's also had sixty years of life that we haven't had, and that means we had better listen to her.

Without doubt, people are more "intelligent" in the sense that they are aware of more information.

Frankly, I don't question that as a species we are getting "dumber" in that we have less wisdom as to what to do with that information. In fact, it seems the "information overload" results in people easily missing what's relevant and important on a regular basis.

I think as a society we are more educated than in the past. 50 years ago Obama wouldn't have had a chance to run for and win the US presidency, I think that shows some kind of growth in human intellect. 50 years ago, 1959, a woman who chose to work outside the home came across lots of discrimination - and no, even though I remember using the yellow pages I wasn't born then! My grandmother had to work FT because my grandfather developed MS and I've heard all the stories.

Then again, our health is really going down the sewer. Type II diabetes is the #3 killer in the US and it is wholly avoidable, caused by obesity.

That's assuming obesity is avoidable. Even with the huge stigma still associated with being fat and the huge amounts of effort people spend on losing weight, diets still have a 99% five-year failure rate. People lose weight--then they put it right back on. (Two-year success rates are a lot better. It's really in the long term that people tend to gravitate back to their original weights.)

In the lab where I'm working (they let undergrads in if they make puppy eyes and promise to scrub petri dishes), they're studying some knockout mice they've labeled db/db mice--that's to show they're homogeneous for a certain recessive gene. These mice are very overweight, diabetic, and hypertensive--all on the exact same diet the control mice get. For them, obesity is genetic and nearly inevitable.

There are a lot of theories about why people might be naturally inclined to higher weights; but it all boils down to, "Before the free availability of nutritious food, people who could process food efficiently and store energy for the bad times lived longer and had more babies." Now that the environment's changed so suddenly, all that genetic tailoring for famine and malnutrition is coming back and biting us in our (much larger) butts.