Right get this idea of getting worse out of your head... There's a really simple way to disprove it, go and pick up a left handed guitar (I'm asuming that you'r not left handed, if you are then pick up a righty guitar), and try to play what you can at the minute, You'll see that you've come a long way, it's just that frustration can get to ya...
As for stuff to play... what kind of stuff do you listen to?...
For simple stuff I'd say Dylan, Nirvana, Pearl Jam etc... but there are some really cool simple riffs you can learn from some guitar books, which are specified for such a job... I'll give an example of a cool riff that's easy to play, have a listen to "shady Lane" by pavement... That main riff is very easy and good fun...
My best advice really, is just keep an ear out, if you like something chase it up. Find out what it is, and try to get the tab for it...
Good Luck :)