That's because he was forced to play SG in Atlanta, while he got to be a forward in Phoenix. And he's too slow to be able to impact a game from the perimiter.
I speak from firsthand experience. I was a non-factor for years cause I was a big slash slow PG until one my coaches said, hey you've got length, try playing forward instead of PG for once in your life. Scoring avg went from 9 to 17. This year, first two games I play forward and avg 25 per, third game our PG wasn't there so I had to fill in, only got 13 (on 6 shots and 4 FTs).
It's tough to be effective when you're misused and that was Diaw's problem. He wasn't comfortable where he was, Phoenix gave him the chance to use his skills.