The studies about dogs and wolves actually show that wolves (gray wolves, specifically) and dogs have a common ancestor and that dogs didn't evolve from wolves. This is similar to humans and apes having a common ancestor, not humans evolving from apes (as too many people still believe).
It makes more sense that dogs and wolves evolved independently. This more sensible explains how humans were able to domesticate dogs so quickly. ("Quickly" in geologic time.)
Would dogs be better off now without past domestication? It's a moot question for me. We can't know the answer; all we can do is speculate. Maybe they wouldn't even be here. Or maybe they'd still be wild and hunted. Or maybe...or maybe... :
: I'm not sure the hunting instinct is gone from all dogs. I do tend to agree, though, that it was a mutual thing (the evolution-wolf thing aside), in that it probably benefitted them and us.
This question always makes me think of other species we've domesticated. What about cows (Aurochs, originally)? Horses? Camels? Etc., etc., etc.
I also think this issue leads to questions related to spirituality (not religion) and metaphysics. I make part of my living as an interspecies communicator ("animal communicator"), and I'm aware of what many domesticated nonhuman animals think and feel. (And make no mistake -- they think and feel in astonishingly intellectual and emotional ways that are often beyond the ability of us humans to understand.)