Yeah I think this is really interesting. I read a few articles along those lines at university. The pathologising of normal personality traits is really problematic. On the one hand, I think that diagnoses can help a lot of people to find the resources to solve their problems, and it can help a lot to have your problems validated from an "official" source like psychology.
But I think it can also be really destructive. You can slip into viewing yourself solely in the role of the "mentally ill person" and it winds up having more of a controlling and miserable effect on your life than simply understanding it as shyness ever could. The stigma of mental illness that unfortunately still exists also means that a diagnosis of social phobia can compromise fragile self esteem even further. Doctors need to be careful of the diagnoses they casually bestow on people, because those words can effect people for the rest of their lives.