Spot on Ash. Haven't discussed tactics with you in a while but this formation just doesn't work for us at the moment. You literally have to have all the pieces working right to make it at least somewhat effective.
Juventus use a similar type of system with a 3-5-2 when attacking and a 4-3-3 when defending. It's quite fascinating to watch really. Vidal and Marchisio play further up to Pirlo while either Vucinic or Quagriella (however you spell his name) drop into the second striker role. It makes for a very fluid attack as they have the support of the bombing fullbacks to help out on the flanks. Asamoah performs this role admirably and it's a very taxing role.
We don't do anything remotely close to this but it seems to be the idea at times. It just didn't work and it definitely restricted the amount of space Kagawa had to work with. I think the other big thing is we don't give Kagawa the ball in the situations he would like. I've noticed several times that kagawa asks for the ball and receives it seconds later than when he wanted it. When you come against a very physical outfit like West Ham, those few seconds mean just about everything in your attacking momentum. That being said, the lad still had a disappointing performance for me. Good thing is, he just returned from injury and I'm confident he'll have better days.
We should use a 4-3-3 like you said. I see that as a better alternative to the diamond. Whatever we're trying to accomplish with it, it's just not working. If we want it to work, we'll have to play it much more often rather than occasionally.