Other people on this forum have propably already answered you. Even though that propably is the case, I would still like to answer your questions in my own way.
Let me begin by saying that there seems to be three issues here, that I think you might have mixed up.
First: Survival vs Happiness.
Second: The meaning of holding the survival of man qua man as the standard of value.
Third: Why would it matter to merely “survive” instead of surviving in a flourishing way?
The first issue, the issue of survival vs happiness, is something a lot of people for some reason have a lot of trouble understanding properly. I don’t know why or how, but for some reason, that is the case. I assume that you have not read The Virtue of Selfishness by Ayn Rand? I assume that you have not read it because the answer for all of your questions is there. In case you have read it but still managed to miss the relevant paragraphs, I would like to quote directly from “The Objectivist Ethics”:
In psychological terms, the issue of man’s survival does not confront his consciousness as an issue of “life or death,” but as an issue of “happiness or suffering.” Happiness is the successful state of life, suffering is the warning signal of failure, of death … Happiness is the state of consciousness which proceeds from the achievements of one’s values. (The Virtue of Selfishness, pp 27-28.)
Now this is, I admit, very condensed writing. But it does answer the first issue, namely how one should properly understand the relationship between survival and happiness. If one understands that there not only is no conflict between the two and that, in fact, they are the very same thing, i.e., that to live in a flourishing manner, i.e., a life-promoting manner is, emotionally experienced and rewarded with the psychological state of being happy.
Let us now deal with the second issue, the issue of holding the survival of man qua man as the standard of value. Once more, this is a issue a lot of people for some reason have trouble understanding properly - or understanding at all. Some people erroneously seem to think that this is to say it’s one thing to merely survive and an entirely different thing all together to survive qua man. That is now at all what is being said or meant here.
What is being said here is that you simply can’t survive if you attempt to act against your own nature, i.e., your nature as a rational being. Now that may seem somewhat trivial. But the thing is that when you attempt to survive without acting like a rational being, that is, without actually using your mind as your primary and fundamental instrument of survival, you will not make it. Not in the long run.
Just like every other life form man has a particular nature, and it is his nature which determines what his survival demands out of him. Basically man can’t survive while attempting to live on the perceptual level of consciousness. I.e., on the level of an animal. Not if he is to survive long term. In order to achieve long term survival, he has to use his mind, his faculty of reason, to think generalize, form concepts. He need to discover and validate the rational principles which defines the kind of actions that actually promotes his life.
If you haven’t read Objectivism: The Philosophy of Ayn Rand by Leonard Peikoff, then do it. He deals with this and many other related issues thoroughly.
Now over to the third issue: Why would it matter to merely “survive” instead of surviving in a flourishing way? Or as you stated the same question more concretely: “If life is the only ultimate value, why does it matter whether I am living as an independent man with purpose, self-esteem, etc. when I could be hooked up to a machine that breathes and nourishes me?”
Life is the ultimate value. But that is also what makes it the standard of value. The ultimate end determines the standard of value. This means, in this case, that the standard of value here is life. That is to say: you determine whether or not life is being worth the trouble with LIFE ITSELF as the standard of value. Which means: the value of the ultimate value, life, is being estimated with life as the standard of value.
Now, at a first glance, this might seem circular, but it really isn’t. Here’s a clue as to why that isn’t the case: Is it “circular” to conclude that one meter is equal to a meter? Of course not. Similarly it is not anymore “circular” to measure the value of your own life with life as the standard of value. Also, notice that you can measure the value of one dollar in terms of dollars.
Basically the answer here is that if you conclude that it is not longer possible for you to achieve happiness, i.e., to live in a life-promoting way, i.e., a flourishing way, then fighting to stay alive is not worth the trouble any longer. This is usually the case when you can’t live as a *human being* any longer. I.e., when you live qua man, i.e., qua rational being. It might be in a concentration camp or, which is the case here, when you’ve been reduced to a “human vegetable”.
Now whether or not you should live as a human “vegetable” or not, is up to you. Nobody else can answer it for you. I would not like to live like that. I would not consider such a life good.
I hope my answer have been to some help for you.