"Beer Bad" is one of those few horrendously bad episodes of the series. I assure you that it is in no way a reflection of season four as a whole, or of the rest of the series from this point forward. Season four is kinda a weird year, and I think it was intended to be. It's a year of transition. The high school's gone (literally.... kaboom). Giles is out of work. Angel and Cordelia have skipped town for L.A. and the Willow/Oz breakup early in the season sends Oz away. The cast is undergoing a bit of an overhaul. We've got new characters coming into play (Riley, Tara), and familiar recurring players coming in full-time to fill in the gaps (Spike, Anya). The dynamic is changing a bit.
Season four has the weakest Big Bad and main story arc (the Initiative). However, there are a tremendously high number of strong individual episodes throughout the season (including "Fear Itself", "Pangs", "Something Blue", "Hush", "This Years Girl", "Who Are You?", "Restless"). The season ends on a high note, and season five is one of the series' strongest, IMO.