If not peer review then what? Centralized review? Is there any hope that that won't collapse under its own weight? Public review? That hasn't done all that well in the Open Source world.
Clearly this means that the system is a total and utter failure and should be tossed ASAP.
Leaving the sarcasm behind now, peer review is but one element in the scientific process - and okay, it failed for the example paper. But another element - free and frank community feedback (ie: no sacred cows) - killed the paper, by the author's own admission. It's but one element of a series of checks and balances.
Besides, although I've only published one paper, the feedback from the peer reviewers made that paper tighter and more professional - so for my solitary data point, that element of the process did improve the quality of the article.