The most important guy on the C's and for their D was and is KG.
KG's going to have Stitch in time to save their rotational nine--or something like that. Shaq will take half the time at the center spot and the other O'Neal has a good chance to be in there too.
But KG is the defensive captain and he's going to have his new front-court mate ready to go.
It's absolutely true that KG is the most important defender on the court. However, he can't give a guy a defensive skill set that he doesn't have. For instance, he can't improve Shaq's lateral movement and ability to properly cover the pick and roll. Similarly, it's doubtful that he can either turn Krstic into a shot blocker or into a tough, intimidating, and/or athletic defender.
There should be incremental improvements playing beside KG, but in assessing defense I think you have to look at the individual defensive units and compare them. Here, Perk + KG > Shaq + KG > Krstic + KG.
I don't think we're doomed by any stretch. I think Shaq will be able to to contain the other team's center for around 20 - 25 minutes, and hopefully JO can chip in, too. Those contributions will put less emphasis on Krstic's D, which can hopefully be used primarily against backups. We can still win a championship with our center rotation, I just think it downgraded a bit.