First, the 1st stage has redundancy against engine failures however the 2nd stage (which uses largely the same engine as in the 1st stage) has only one engine. So if the per-engine failure rate is too high that could spell bad news for overall vehicle reliability even if the launcher can survive 1st stage engine failures remarkably well. Some reasons to be optimistic: 2nd stage engines have much lower aerodynamic loading and don't have to operate through "max-Q" as the 1st stage engines do (which was incidentally the point in time that the engine failure on this flight happened).
Second, the Falcon 9's 1st stage engines are arranged in a 3x3 grid which seems to result in some unfavorable aerodynamic forces on the engines on the corners. It's possible that this contributed to the engine failure (which occurred in a corner engine) and it's also possible that it contributed to the destruction of the engine fairing after it was shut-down.
Third, the particular engine in use on this vehicle (the Merlin-1C) will only be used on one more flight before being replaced (in the Falcon 9 v1.1) with substantially redesigned Merlin-1D engines (in both the 1st and 2nd stages). Additionally, the engine arrangement on the first stage will change to be octagonal, radially symmetric instead of a grid.
It's good to know the systems and structures to protect against 1st stage engine failure work well, however a lot of the reliability analysis up to this point is somewhat obsoleted by the imminent change in design. I suspect that the engine layout and upgrade will lead to greater overall reliability, but it will take several flights to prove that.
Anyway, some things to chew on.