He "resets", same as every time a new game comes out. You aren't allowed to carry over Level 100 Pokemon from Gen 3 or 4 to Gen 5 and be a master at the start. If we have to start over every region, why does it matter if Ash does?
He's not done. As long as Game Freak keeps making games, Ash will have somewhere new to travel and new Pokemon to catch and train. I don't see this regression everyone seems to love to point out. It always falls back to the Trip battle against Snivy. 2 things about that battle:
1-Zekrom disabled Pikachu's Electric attacks, and being an Electric Pokemon, that takes its strongest moves away from it.
2-No one ever mentions it (probably because it would flaw Trip's Snivy and make Pikachu look like it was cheated) but Snivy being fresh and supposedly only at Lv. 5 knew Leaf Tornado, a move it can't learn until Lv. 16.
If games keep coming, the anime will probably keep going. The anime brings kids into the games (that's how I got into them) so if it helps sell games, they'll keep it.
Ash is still a young boy, which perfectly explains why he isn't a Master yet. And again, reseting represents the restart at the beginning of each game we go through. But each region he goes to has different events that take place, like Best Wishes has the Junior World Championship. And everyone thought Ash was going to face Drayden for his last badge, but he faced Roxie instead. Each region is not a complete copy of the previous one.
Having a perfect, unbeatable trainer is better than one that is more human? Goku made mistakes in DBZ too, despite being the best.
These issues with Ash:
Doesn't age - doesn't matter. He's a cartoon.
Annoying and makes a fool of himself - It's a kids show, he has to do silly things for laughs.
Lose everything - 44 badges, and various smaller things he's done. Not toe mention being the first person ever to KO Tobias's Darkrai.
He's not a failure. Not winning the Pokemon League =/= crappy trainer. Paul is thought to be one of Ash's greatest rivals by a lot of people, but he also lost in the Kanto, Johto, and Hoenn leagues.
And that would make the show better? No, it would make the show predictable and then they'd replace him and do the exact same thing over and over again. THAT would be boring, to watch basically the same character just with a different look and name do the exact same thing every time. At least with Ash, they can play with stories and such. Can you imagine what the fanbase would say if Red lost a battle if he were in the anime?