M.Eng is just for someone who would like to become an expert in certain fields and not neccessarilly will make someone standout from a B.Eng. However, PhD is different because that is the degree for different kind of job and not everyone may enjoy that kind of job. :)

I agree with you that higher degree does not mean lower capability. It does not mean higher capability either. Getting a master degree or join the industrial two years earlier are just two different way of adding tools into ones tool box.