SpaceX's 3rd rocket recently wiped out.
http://www.nytimes.com/2008/08/03/science/space/03launchweb.html?_r=1&scp=1&sq=spacex&st=cse&oref=slogin

See SpaceX website for posts about what happened (stage separation failed), and what they're doing from here (carrying on with plenty of money). Also info about vehicle is availabe on the site.
www.spacex.com

They are 0 for 3 now. Unfortunately, this rocket was carrying some expensive satellites (previous losses were just dummy payloads unless I'm mistaken). This news makes me feel better about my own rocketry endeavor which had a pretty low batting average. Elon Musk (SpaceX founder) has a helluva lot better funding than we did -- he is the founder of Paypal which was purchased by Ebay for a healthy chunk of change -- and I suspect that they will be able to push on and succeed in the long run. However, maybe they should chalk up a success before loading expensive DoD and NASA satellites onboard.

Why is SpaceX having so much trouble? Well, getting to space is tough and there are about a million gotchas. The experts who designed the Apollo-era vehicles knew lots of those issues, but are mostly unavailable for engineering staff work. Elon's hired good people (well everyone but me), but my impression is that they're pretty young.

Stage separation was a doozie for my company(Space Transport Corp.)'s rockets too. As the rocket travels at supersonic speeds though 100+ mph wind shear, this puts lots of strain on the joints between stages (like most launchers the SpaceX vehicle has two stages). Then these parts might be unhappy about doing their job. Elon's been trying to keep things very light to maximize the allowable payload mass. If the rocket works, this might maximize profits. But maybe the lightweight stage connection was a little too light? On the other hand, it could've been something totally different like a software or electrical problem. Elon usually posts more info about failures on the SpaceX website, so perhaps he'll post some details about what happened here.

Was quality control bad? Probably not. They probably had it built just as planned. It's hard to plan properly when the only way to *really* test the thing is by flying. We humans learn best by trial and error. These are expensive tests though, so hopefully they haven't bitten off more than they can chew. I think they'll be ok though.

Other private space companies that are coming along to rattle the establishment (read: Boeing/Lockheed-Martin) cage:

www.blueorigin.com
(funded by amazon.com's Jeff Bezos)

www.virgingalactic.com
(funded by Virgin's Richard Branson .. following up with Burt Rutan on work [i.e. winning the X-Prize] funded by Microsoft co-founder Paul Allen)