They failed because they didn't play well while the opposition played better. Brodeur was good but the defence and forwards didn't play that well. It wasn't really a case of a team playing well but losing in a one game elimination setting. There could have been some more speed at forward but those forwards were easily good enough to win with. Crosby always gets trotted out and he would have been more valuable than Bertuzzi (the worst forward selection) or Doan but he really increased his scoring after the team was already selected. Some combination of Staal, Kariya, Marleau, and Crosby would have improved things.
The bigger problem was defence. Niedermayer missing was huge, and Pronger, who was never a great fit internationally, played through a foot injury I believe. Canada's other defencemen were not a good fit for the larger ice surface regardless of how well they played in the NHL. Having Boyle on the taxi squad while Foote, Blake, Regehr, and McCabe played was a big mistake.