Here's the key mistakes they made with the game:

1) Too much hype. Should've just shut up, do your work, and talk a whole hell of a lot less. Hype is good if you can deliver, but bad when you fail, as the outrage and lashback is brutal.

2) Subscription. They should've went with microtransactions. And not releasing subscription content for single player, bad move.

3) GUI. It's not customizable, can't move stuff around, and can't even scale it. One of the worst UI's I've experienced in a long time.

4) Bugs. Don't release a buggy game. That is a killer. Was in the Beta, and bugs that had been reported about for months still weren't fixed in release. Just a piss poor job of QA.

5) Removing themselves from Diablo. They should have done a lot more to remove themselves from Diablo. They should've made it more clear, to the point that it says it on the damn box, that this game is not in the style of Diablo. Go play Titan Quest or Mythos for that.

6) Box cover art. What the hell were they thinking with the normal version? Amongst the worst game boxes ever. Horrible. Hope someone got fired over that choice. Should've went with the CE box cover for the game.

7) Unfinished game. Things they talked about weren't in the game at launch. This goes back to the hype, but never talk about shit if you can't be sure it's going to be in the game.

8) Vary the game. The great thing about Blizzard games is that you can feel your progression. Diablo as you progressed, the zones changed. Diablo II, same thing. Just by a screenshot, you can tell where you are in the game. WoW, zones are varied so that you can also tell where in the game you are by a screenshot. HGL... hell if I know where you are most of the time. Some station, some tunnel, some outdoor ruins. They should've made the visuals change as you level up to give the concept of progression and vary what we get to see.

9) BUGS! This game was so freakin' buggy at launch. It was horrible. One of the buggiest games ever. How did they even launch this game in the state it was in? They needed that miracle patch that Funcom pulled out for AoC.
Yes I know I mentioned it twice, that's how bad it was.

10) It's not an MMO. Even mentioning the word MMO in this game was a death nail in it's coffin. They should have never mentioned the word MMO, ever. It was an Action RPG. Plain and simple. Load up the game, kills things, level up, get phat lewt. That's all Diablo was.

The game is getting better, it's better than it was, but there are still a lot of problems with it, the biggest one glaring out is the GUI that just is frozen in suckiness. They need to fix it, and at least make it scalable.