Defenses are more sophisticated right now. I'll grant you that.
Young Shaq had to play against Hakeem (indisputably great), Robinson, and Ewing. But Hakeem and Ewing were already 30 at that stage (granted, they still had good years ahead of them, but it wasn't like he battled his prime against them really in their prime). Alonzo, a border-line HOFer is probably the only center who had a prime that somewhat coincided.
When Shaq was at his best, the best players in the league were PFs (Duncan, Garnett, etc.) and he didn't guard them, or vice versa. He played some good years against Yao and Dwight, but they weren't his best.
My point: you denigrated KAJs competition, but I don't think Shaq had a ton of good Centers who could oppose him. In fact, as the league was larger, and there weren't as many good big guys, over the course of the 82 game schedule I would wager KAJ played a greater amount of top notch centers in a season than Shaq.
But, just to deal with KAJ: He had to play against Cowens, Lanier, Unseld, Reed, Walton, Chamberlain (tail end--much moreso than any against Shaq), Gilmore, young-Hakeem, Moses Malone, and Robert Parish.
While I agree there is more total talent right now, with fewer teams concentrating that talent, I think that the levels were similar, and its silly to discard it.