1. It was a 48-hour coding competition, so some bugs are to be expected.

2. The hosting for the apps in this competition was turned on literally the day before: http://twitter.com/joyent/status/22204412477

I don't think that "node can't scale" will get much press, just because node is pretty performant and many people conflate performance and scalability. Node's asynchronous api would seem pretty good in a services-oriented architecture, and scalability is mostly about how the app is architected. (and in 48 hours, that probably means "quickly")

On the other hand, node.js is still a very young platform and there are a lot of unsolved issues. As of right now there are only 3 or 4 dedicated node.js hosts that I know of, and all are in private beta. People are still trying to figure out best practices for design and testing.

The thing that I took away from Node Knockout was that here are a bunch of really cool web app ideas that, given time, could be built with node. I think the apps were 'frozen' pending judging, but I know many of the top app teams were planning on improving them as soon as they had the chance.