Yes, professional investors do make mistakes (as the better VCs will admit: http://www.bvp.com/Portfolio/AntiPortfolio.aspx), so this is something to keep in mind after meeting with potential investors.
That guy was not rejected because his idea was bad. The prototypes he brought with were of very low build quality. The investors had doubts about his abilities of running the bussiness rather than the idea itself. I don't think they made a mistake.
A prototype is just to get an idea across. He easily could've hired a firm to design the product properly with the GBP100k he stood to gain from that contest.
The main motive behind these shows is entertainment. They just need to make a big showy production with drama, excitement, and hurt feelings. They are pretty lame imo. On the other hand, it's a chance for some investment, so I won't fault people for going after it.
I've seen a bit of Dragon's Den. My observations, unlike VCs, these guys tend to be absolutely direct and say what they think about the idea and the ability of the founders. I've found that they tend to look for either business experience or real traction like revenue and profits. So the show isn't web 2.0 compliant.
"Reality" contest TV shows are anything but objective to begin with. The judges are purposely overblown so the audience will react to the judges. The contestants are selected according to personality, also for audience reaction. It's about making good television, not good inventions.
I think I saw two episodes of UK's Dragon's Den from the first season (you can find them on bittorrent sites). It was an interesting show from what I remember. For those that never heard of it, here's what wikipedia says:
"Dragons' Den is a television programme that originated in Japan where the format is owned by Sony. The format, which now airs internationally, consists of entrepreneurs pitching their ideas to secure investment finance from business experts -- the "Dragons"."
Basically, you pitch a bunch of rich people, entrepreneurs and investors and they tell you what you think and they might invest into your idea as well.
BTW, what is David Beckham doing designing toys?