Our friend Chris Messina was closer to the death of ma.gnolia than most of us, having worked for them as a consultant, as well as having a close relationship with the site owner. He writes with great insight about how this has affected him personally, as well as the lessons he sees for web 2.0.
The thing I don't get about the whole deal is "Why were there no backups?". I've yet to hear any explanations. However, they have been making some progress in scraping web caches and if you were affected by the ma.gnolia breakdown, there's now a chance to recover your data.