There have been some recent discussions in the blogsphere that Valencia really isn't hitting all that much worse than last year. And there may be some truth to that. Valencia started with a hot month and then tailed off considerably the last couple months of last season. This left him with season averages that were quite inflated compared to his typical level of play. So while he may not be hitting that much worse, it looks a lot worse compared to the numbers that made him a given at third base going into this season.
The Twins offense struggled until recently, but at this point Valencia's numbers are bad even in the context of Twins's starters. Among the seven players who qualify for the batting title, Valencia is last in AVG, 5th in OBP and 6th in SLG. This from what is typically an offensive oriented position. While Nick Punto might get away with Valencia's numbers, Valencia doesn't have the glove to justify hitting this poorly. Worse, Valencia has shown no real signs of coming to life. If anything, his recent numbers are worse.
By contrast, Hughes bat has picked up since he was recalled from Rochester. He isn't as good defensively as Valencia, but he has the flexibility to play a couple other infield positions. And for late inning defense, Tolbert provides a glove off the bench better than either one.
There are really two questions. One is whether you are ready to give up on Valencia. The other, if you aren't, is will he be helped more playing at Rochester or by continuing to work through things at the major league level. In the end the answer to those questions may depend less on Valencia than how long the Twins continue their hot streak. But once all the injured players return a decision will have to be made on whether to keep Valencia or Hughes on the big league roster. If the decision were made today, I think they would have to go with Hughes.