Yes, actors are as good today as they were back then because at any given time, there are countless talented actors (and actresses) that are able to command a scene and add realism to their roles. There are many actors (and actresses) that are multi-talented (right now) that are able to sing, dance, and act in different entertainment mediums.
Yes, actors are as good today as they were back then, because the craft hasn't changed. In fact, with better cameras and higher definition, today's actors are under even more scrutiny for their performances. The difference today is that there are so many more actors that are able to practice their craft, we get to see the marginal ones.
I tend to believe people are always progressing when it comes to skilled professions. Sure, there are plenty of actors today who are only on screen for their good looks, but there are thousands upon thousands of more actors (and people wanting to be actors) today than there was during Mr. Wallach's hayday. Today's good actor's have studied their contemporaries, taken the good they saw and built on it to fit what the audience of today wants to see. Just as Mr. Wallach did before them.
Actors of the silver screen and golden age of film couldn't rely on good looks or CG to make them look good. To make it in the business back then they had to not only be able to act but often times needed a second ability, such as singing, playing an instrument or even dancing. Nowadays a person's good looks often determines how their career will go, with very few exceptions.