The death of diversification?

Whilst it is true that at a broad asset class level, in 2008 almost every investment generated negative returns, and therefore one could question the validity of diversification in portfolio strategy, there were other, more subtle changes that took place that were probably missed out by a majority of investors.
Studies on historical returns show us, for example, that almost all performance returns are generated by the weights that are given to the various asset classes. In other words, the investment choice within an asset class contributes to only a small fraction of total portfolio return. Choosing investment A instead of investment B should not materially affect the overall performance outcome as historical data shows us that the divergence in performance of investments within the same asset class tend to be small.
The big change with this ongoing crisis is the contradiction of this observation. 2008 in fact showed us that what mattered most was the choice of investment as the divergence in performance within the same asset class widened significantly. This was most clearly observed in the hedge fund universe where the divergence in performance was so dramatic; it was difficult to believe that the investments belonged to the same asset class!
The 2008 experience begs the question as to whether what we have witnessed is just a one off or an actual paradigm shift. If it is indeed the latter, it will require a revision of modern portfolio theory.