Conclusion- it is of course important to test different creative to find the best performing ad, but it's also very important to disable the ones which you don't want later on, otherwise google will be free to pick them and show them for their performances, rather for your own good, and without letting you make this decision.
I wonder if you have a different solution for this problem, or did you experience similar AdWords behavioral?
I too have seen my number of clicks and impressions go up, with a decline in the conversion rate...and summer is our season. Start experimenting with searches that you are not bidding on(but are at least in the same zip code), and I think you will be unpleasantly surprised with what the algo is matching your ads to.
Back to your original post about which creative google uses....I am starting to fully believe that Google makes its decisions based on what gets them more money and more clicks...your success is #2 in priority.
IMO...
This will show the ads more evenly which should give you time to evaluate the conversions for each version and act accordingly, rather than google ramping up the serving of ads based on CTR, not ROI.
You wrote the ad, Google didn't. Obviously something in your new ad differs from the old in that it ENTICES people to click more often, yet it either converts at the same rate or less (a lower rate, doesn't however mean less TOTAL conversions) so they aren't buying as often. So really, the control lies with the copywriter.
Your ad copy needs to pre-screen potential visitors in order to keep conversion rates high WHILE at the same time be enticing enough to click on vs. the other advertisements. It is a delicate balanacing act.
Including things like the price of the item in the ad for example helps keep the casual browser from clicking more often, as they can get some of the information of what they are looking for in the ad. Of course, including the price (if too high for the customer) could reduce your CTR (because they know they can't afford it), but those who do click are more qualified and more likely to convert.