I'm surprised no one has posted this yet.
BA Blog: Falcon doom found: a whisper of thrust
Quote:
Elon Musk of Space X has released the news of what happened to the Falcon 1 rocket that failed to reach orbit last week.
"The problem arose due to the longer thrust decay transient of our new Merlin 1C regeneratively cooled engine, as compared to the prior flight that used our old Merlin 1A ablatively cooled engine. Unlike the ablative engine, the regen engine had unburned fuel in the cooling channels and manifold that combined with a small amount of residual oxygen to produce a small thrust that was just enough to overcome the stage separation pusher impulse.
We were aware of and had allowed for a thrust transient, but did not expect it to last that long. As it turned out, a very small increase in the time between commanding main engine shutdown and stage separation would have been enough to save the mission."
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As can be seen in the video MaDeR linked to (thanks!), the stages separated a little, but because the lower stage still had a bit of thrust, it rammed into the upper stage.