He didn't say that, he said "considering his original power, he should have been able to do better."
Piccolo talked about how Gohan is strong in this episode and told him that it doesn't matter how strong he gets if he can't evoke his "original strength" and tells him about how his "overeagerness" is what's holding him back and later tells him about his arrogance.
Basically the issue is that Gohan has been fight wrong, not that he's weaker, Piccolo tells him that he's strong more than once and that that isn't the issue.
Through out the episode they say "power" and "strength", but seem to be specifically referring to Gohan's Ultimate from more than anything.
Either way they're going to train more.