Man... how frustrating that must be for them!
But I have to admit, this is a great example of the differences between private and government funded space programs. If a government space agency like NASA was doing a review of the updated Falcon 1 configuration used for this flight (evolved Merlin 1C engine), it probably would have noticed the problem prior to the flight, and might have saved the mission. But at what cost? Having to satisfy every demand of a customer like NASA must add a huge cost to the development.
I guess this reflects the risk of a fully private development of a launcher (or any space system). It might take an extra mission to iron out all the bugs, but if you can save costs elsewhere, you can hopefully complete your development program at a lower overall cost.
Note that Falcon 9 on the other hand seems to have complete NASA oversight (see this Press Release about the Critical Design Review (CDR) for the Falcon 9/Dragon Mission), so one might expect that the Falcon 9 will suffer less failures.
Finally, compliments must go to SpaceX for showing the public their development setbacks in such an open, honest manner. It is a fine example for other developers of launchers or space hardware. Could you imagine the traditional government agencies providing such transparency on all their failures?