I think you have to put a big chunk of the blame on Jay Triano. From a talent standpoint, Canada had far more NBA caliber players than any other team in the tournament, including 1st rounders. Secondly, the team was jelling nicely in the first round, so to un-ravel all of a sudden in the second round, it doesn't seem like a talent issue. This is where you would expect Jay's years of experience with international coaching to come to the fore, but it didn't. Perhaps that overachieving Canadian Olympic team was mostly due to Nash than Jay, way back.
Jay seems similar to coaches like Randy Wittman and Terry Stotts. Nice guy coaches who know their X's and O's, and whom GMs don't feel threatened by, but are better suited as assistant coaches.