I agree for the most part. Although there is a lot of empty space, I think the font and size right now are just about perfect. Also, changing the icons into text links makes them a lot less obvious. Maybe it's just me, but text seems less...friendly. I also don't like the links being positioned all the way up there, but that's more of a personal preference than anything.
I think your new design idea could work if you kept the current font and perhaps included small icons (about the size of favicons or perhaps smaller) with the links. I just feel that eliminating the icons altogether is a step in the wrong direction. A bit of change certainly wouldn't hurt, but having visual cues is incredibly useful.