First of all, what we have now is something different. Getting venture capital is still incredibly difficult for most companies. As in, if you have a 4-person startup you'll probably have one or two people working full-time on the funding game, which puts significant drag on technical growth. Not fun. Moreover, most startups I know about describe a tension between true technical excellence (scaling, robustness, and correctness, all of which become critically important in the middle and end game) and chasing the more superficial features that appeal to VCs.
Facebook, along with a few other startups that have capitalized on this bizarre and silly "social" fad, is probably overvalued. Everyday startups are still severely undervalued. It's a different pattern than the one in the 1990s. In the 1990s, people were absurdly optimistic not only about technology, but about the economy and society as a whole. People actually believed, in 1999, that society had permanently transcended the idiocy (um, wrong!) that characterized the bulk of human economics and social relationships throughout history. They were loopy. In 2011, people are dismal and depressed and anxious and only a few of the perennial optimists are starting to perk up (they were always there, but people are now listening to them again; I have no idea whether that's a good or bad thing for peoples' money, but if it's good for smart people with ideas, we must encourage it).
Second, anything that pulls opportunity into the hands of the smart and ambitious, instead of the socially well-connected who usually monopolize it, must be encouraged, no matter what its financial implications are. Anything (except a war) that gives smart people a chance, which most of them haven't had for a very long time, must be encouraged.