Three stations are needed, especially around peak periods. Deansgate takes quite a bit of passenger capacity, which couldn't be comfortably accommodated at Oxford Road at busiest times. (It is often uncomfortably difficult to get on / off of platforms 2 and 3.)
Oxford Road is needed, as a number of services start there from platform 5. It also offers the opportunity to regulate services and for faster services to get ahead of slower trains.
Deansgate has a strong catchment area, which has increased with a lot of development at the bottom end of Deansgate, Castlefield and beyond.
Closing one, would be difficult, closing two would be ridiculous. The Ordsall curve was designed to be part of the scheme along with additional platforms at Piccadilly and 4 tracks between there and Deansgate. Without those, it is the white elephant that we see today. The solution is the needed development to facilitate the capacity, not closing stations.