I would like to offer a couple of postscripts to Skip's Post-Mortem on the U.S. performance in the World Cup.
1. Although the results differed, the team's performance closely matched 2002 -- one very good game (Portugal '02--Italy '06), one ok game (Korea--Ghana), and one disaster (Poland--Czechs). For mid-tier teams like the U.S., advancing beyond group play depends a lot on the group's composition and random variation (balls going in v. near missess; penalties; ...). These fell in in the U.S.' favor in '02 but against the U.S. in '06.
2. Maybe the biggest strategic blunder that Arena made was not going all out to win the CONCACAF qualifying outright. After beating Mexico and securing the World Cup Finals spot, he backed off in the Costa Rica game and took a 3-0 defeat. In the end, this permitted Mexico to tie the U.S. on points but with a better goal differential. The FIFA-crats may have seeded Mexico higher anyway, but the case would have been much weaker given the U.S.'s higher ranking and winning CONCACAF. If the U.S. had pulled Mexico's group, they likely could have played exactly the same and advanced.
3. I do think that Arena underutilized (maybe underdeveloped is the better word) some great young talent. The U-20 team won a "group of death" including Argentina, Germany, and Egypt at the 2005 Youth World Championships, yet none of those players made the Men's National Team in Germany. I have wondered for some time, how could a team not overloaded with great players (as Skip noted) overlook young players who have performed well against top-level international competition? Arena wasn't shy about taking Donovan and Beasley in 2002 but drafted no such players in 2006.
I decided to do a little investigating of other teams. Eleven countries in the 2006 finals had U-20 teams at the Youth Championships. Of those eleven, only talent-laden powerhouses Brazil and Italy (along with Japan) took no members of their 2005 Youth team to Germany. Here's my count: Argentina (2), Australia (1), Germany (1), Korea (3), Netherlands (2), Spain (1), Switzerland (3), Ukraine (3). As the list shows, both soccer powers and mid-tier countries took U-20 players. Among the individual players, some are no-brainers getting serious time with big clubs such as Messi (Argentina-Barcelona). However, many others are with lesser clubs or in-country leagues. Charlton's Jonathan Spector (on loan from Man United), may have made the U.S. barring a late injury, but he was the only player really considered.
The name of Freddie Adu is best known, but probably the player who could have helped the U.S. the most is Man United's Guiseppe Rossi, who is still eligible to play for either the U.S. or Italy. The seventeen year-old attacking midfielder played in 12 first team games with ManU, scoring 4 goals and earning 4 assists. One Soccernet article put him among the top 3 teenagers in England. The trouble is that his aspiration is to play for Italy. In spite of his dreams, his Wikipedia entry notes that
"Rumours had circulated that he would have considered playing for the U.S. had they offered him a place in the 2006 World Cup squad, but such an offer never materialized."
Arena not only handed roster spots but lots of playing time to Donovan and Beasley in 2002. One wonders, had Rossi not only been given offer of a roster spot but a promise of significant playing time, could he have turned it down given that a first team slot and significant playing time for Italy may be 4 or 8 years away, if it ever comes at all.
A related question also comes to mind: if U20 stars from other countries not only make national team squads but garner significant playing time with clubs (sometimes big clubs), why is the MLS culture one where coaches are very slow to utilize these players when they turn pro. Instead, they gather lots of splinters watching older U.S. players who couldn't stay on the pitch with their Argentinian or German peers.