Jerry once wrote about Herbert in another thread (it isn't up anymore, sorry) in which he took a liking to the character, but Jim and Frank felt differently. Kind of a "this just isn't working" feeling. That's show business, whataya-gonna-do?
Also, if I understand the story correctly, Herbert was meant to be a replacement for Kermit the Frog, who was to be phased out in the second season. No new skits were shot with Kermit then, so he was a new Muppet to give lectures and be the fall guy for Grover and Cookie Monster and whoever else was around.
The Time Magazine article from 1970 (Big Bird on the cover) spoke of Kermit being tuned out. Similar reporting was in Look Magazine. But, as history will show, reports of the frog's death were greatly exaggerated. As a result, Herbert was needed less and used less, though his skits did show up in reruns.
Does this help?
PS. If someone like a Secret Squirrel is looking in, and my facts were not accurate, feel free to add any corrections.