The "God is dead" line was actually mocking people who thought they could easily replace God, which Nietzsche understood was necessary for objective standards, with flimsy personal beliefs in individual man's reasoning skills. The old man in the story is shouting about how without capital G God everyone is just falling in an endless abyss of subjectivism, but even he gives up when he realizes the fart huffing postmodern atheists he's speaking with are too retarded to even understand how fucked they are. Which, if you've ever seen a modern atheist debate, is so prescient it hurts.
The problem with following Nietzsche is that he could never reconcile his disbelief in God and his understanding that he was necessary. His ubermensch idea was just trying to replace God and objective morality with a really charismatic individual whose subjective opinion was made objective through sheer force of will over the concensus. Which, let's be real, even he didnt believe in. The man drove himself insane and purposefully gave himself syphilis which eventually killed him because he didnt believe there was a real way out without God. I don't think his ideas were that good, but I give ol' N a lot of leeway since I consider him more of a poet than a philosopher.
I think a lot of this is owed to the nature of Christian God within the evolution of western society. For a long while, advanced society was the direct result of polytheists. Eventually polytheism fell out of favor once faith in the government wavered (as well as those gods, with 'mortal flaws', who were seen as a direct extension of said government), the wavering of which was owed to an influx of barbarians, excessive corruption and other, smaller problems that ballooned into bigger ones when solutions could not arrive fast enough. Some monotheism came into existence, but these were generally depraved cults and were absolutely not the bedrock for Roman (nor any other early) culture.
Once a dark age arrived (the result of said polytheistic imperial culture collapsing, allowing roving bands of faggots to ruin things for a while) it was only thanks to Christian monks that considerable knowledge of the older world was preserved, where it could be rediscovered once things calmed down, then summarily built upon. Polytheism continued to hold its negative stigma, but something new caught everybody's attention: a new sort of Christianity, a tranquil and monotheistic way of life that centered around a benevolent and selfless God (who was very contrary to the transactional, irrational, emotional, frankly retarded Old Testament version of Christian God.)
Now, not too long after Nietzsche and his theories, we're back at square one: floundering governments that 'stem from' a certain set of religious doctrines. In this regard I don't think Nietzche's ideas are wrong at all; he believed modern society was built upon Christian ideas, which in many ways it is, and once the governments propping up this modern society suffer the same fate as the last set of ideas that 'built modern society' (polytheism) we will see humanity once again degrade into a bunch of evil apes. There will probably be another dark and violent period, which is what everyone seems so paranoid of nowadays.
Despite all of that it seems probable the people who obsessively catalog knowledge (and successfully retain it once the barbaric bloodshed starts) will serve as the philosophical and spiritual bedrock for whatever grand society comes next. There is a non-zero chance it will be Kiwi Farms with Null worshiped as a vindictive, cheese-hating patriarch.
