I personally believe that coddling youth can potentially do more damage than good. Learning to overcome challenges and deal with defeat is part of being human and growing up and it builds a sense of confidence and self reliance.
On the one hand, I can understand that you don't want to grind kids down and completely humiliate them. On the other hand, I don't see how they can learn to handle adversity if we constantly shelter them from anything that might hurt their feelings. Sure, it sucks to lose (the soccer and basketball teams I played on were terrible) but sometimes life works out that way, unfortunately.
Granted, I'm talking out of my rear end here since I don't have kids, but several of my friends do and most of them agree that kids aren't that fragile.