The downside? Well, according to this Popular Mechanics piece, When the U.S. Navy Had Tiny Hot Rods That Flew Over the Sea:The Pegasus class hydrofoils were a ship in search of a mission.
The six ships of the Pegasus class—Pegasus, Hercules, Taurus, Aquilla, Aries, and Gemini—could certainly sink big ships. But the Navy soon realized that was pretty much all they could do. They couldn't operate with the rest of the fleet, hunt submarines, shoot down enemy aircraft, or do all the other things corvettes, frigates, and destroyers could. Pegasus was a one-trick pony, and her trick could be done by other platforms, including missile-carrying aircraft that the U.S. Navy already had in the hundreds.Hmmm.
Couldn't do ASW? Couldn't do AAW? Perhaps not in the days the PHMs were designed, but they weren't designed for those mission. Nothing in the rule book says that you couldn't lay patterns of sonobuoys from a PHM and receive signals from them in an "ASW-configured" PHM with some torpedo tubes. Nothing said you couldn't provide anti-air missiles on "AAW-configured" PHMs. You could probably even have other platforms that could operate helicopters or unmanned aircraft from their decks. And perhaps have PHM tender lurking about to do the work that tenders used to do in the absence of shore bases.
A counter-argument to the PM piece from the Christian Science Monitor in 1983 The US Navy's daring new ship: Will six be enough?:
''They [the PHM vessels] can be a better use of resources,'' enthuses retired Capt. Gil Slonim, now president of the Oceanic Education Foundation in Falls Church, Va. ''Should the Navy assign a 3,000- to 10,000-ton ship costing $500 million plus to carry out a task which could be accomplished by a 250-ton ship costing $100 million and with far fewer people? In that context, there is a place for hydrofoils.
''You can't just think single-purpose ships. You have to think mission, the total fleet mission of controlling the seas and projecting power overseas for our island nation,'' Mr. Slonim continues. ''Hydrofoils point the Navy toward 21 st century technology.''
Nothing said you couldn't have squadrons of these things operate together in teams consisting of ASW, ASUW, and AAW units working together depending on the perceived threats in littoral and archipelago areas. Like, say, the Philippines . . . From Navysite:
The PHM project was started in early 1970 by CNO Admiral Elmo Zumwalt in an effort to increase the Navy's number of surface combatants. The project called for a cost-effective hydrofoil boat designed to operate in coastal waters and equipped to fulfill the missions of destroyers and frigates in those areas so that these larger ships could be deployed to areas where they are needed more. These missions included surface surveillance as well as immediate responses (SSM missiles for example) to any hostile actions conducted by enemy navies. (emphasis added)
Lack of imagination, I suppose, coupled with the aviation bias and big gray hull bias of "Big Navy." At any rate, instead of modifying the design to change "one trick" into "several tricks," PHMs died.
So 40 years later we screw around with much bigger, far more costly hulls which still await technology that will allow them to be AAW, ASUW and ASW competent, except for their main weapon system, the attached helicopter/Fire Scout detachment.
Nice PHM history article at Hydrofoil World.