In busy airspace with other aircraft around, my head is moving around like a spinning top, especially looking for other traffic turning onto final approach. I've seen one too many close calls so that's why I'm quite particular about this.
In this case however, the other crew was definately in the wrong, since they were told they would be no.2 and yet didn't locate the other a/c or ask for a position check before turning from downwind onto base. Not very clever at all.
I'm not sure whether standards are going down, this incident was in the circuit so I would hope no-one would be playing with avionics at this stage. Lookout is generally not great, especially when people get out of the circuit, but I don't think it's any worse than I've noticed it before.