Yes...they definitely fail. Every time it's hit with a surge, it chips away at the joules it's designed to protect. My guess is yours is way overdue and is just allowing straight power to your equipment...including surges in power.
Newer ones will have better surge protecting technology (how much better varies....ALL better than 12 yrs ago) and some have technology that keeps power more consistent, but no, will not improve picture quality....unless you're still watching a tv that's 30 yrs old that doesn't have its own power distribution/regulation.