Yeah, the break up was absurd. They just decided they... had to for some reason. Their relationship was going fine, they were in love but there was this neurotic, obsessive navel-gazing that they might not have anything else in common, so obviously the relationship was doomed. It was silly, and so clearly put in just because the writers wanted to break them up.
Season 3 actually killed my interest in the show for a long time too, simply because the writers made Nick a certified idiot just to inject drama into his relationship with Jess. I only went back and watched seasons 4 to 7 last year, and did enjoy them. But I wish they'd given Nick another love interest, rather than Regan. Megan Fox's deadpan reactions to the craziness of the loft were good, and some of the lines they wrote for her were amazing ("I honestly believe you're the result of a man/dog body swap") but she never sold the attraction to Nick that Regan was supposed to have.
It's strange, because Schmidt/Cece was actually well written and, despite having more drama than Jess/Nick (arranged marriages, wedding aborted, cheating and discovery) it ran much more smoothly because the writers just let it happen. Same with Winston and Aly, who I really enjoyed in the latter seasons.
I feel like we were watching a writing team grow up, with New Girl - they started off being completely incapable of writing good relationships, and relied on guest stars completely changing character from one episode to the next to explain breakups, then they got scared when they were asked to write serious relationships. But finally they got over it and realised it's not quite that frightening, or that difficult.