Not to discount your observations of a couple of your friends, but if you look at actual scientific studies of LSD's effect on creativity,[1] there is a very clear link.
That said, it's not a panacea or a magic pill. You are not guaranteed to become more creative when you take LSD. You most likely will not become Mozart or Picasso by taking it. It is even possible to misuse or abuse LSD, as you can misuse and abuse alcohol, food, water, and sex.
My own observations of people having unproductive experiences from psychedelics is that they take them in ignorance, without much if any education about what they're taking, without proper respect (ie. to just "party" or "have fun" or as attempted distractions or escapes from lives that are miserable in various ways), in an unsupportive or even actively hostile context, without planning, and without a goal.
They often believe in all sorts of urban myths about LSD and other psychedelics (like that taking LSD seven times makes you "clinically insane", or that LSD damages your chromosomes or makes you stare in to the sun until you go blind, etc), they often mix drugs (which can be very dangerous -- especially when one of those drugs is alcohol), and do really stupid things like driving under the influence.
Is it any wonder that such situations and attitudes lead to bad outcomes? Should drugs be blamed for what happens? Or could some responsiblity for what happens be laid on the shoulders of the people who choose to use them in stupid ways, or on the society that keeps them ignorant or tries to lie about the effects of these drugs or actively tries to harm drug users, or at least make constructive, safe use of these substances very difficult and dangerous?
About your friend who was "sectioned" (I presume this refers to involuntary confinement to a mental institution), it sounds like you know very little of what actually happened to him or his psychological state before or after the incident. I would not be surprised if his family (who you admit have had mental problems of their own) or the authorities overreacted, and that his confinement to the mental institution might have been a much worse experience than his LSD trip.
Finally, an LSD trip can be a very emotionally intense experience. Emotionally intense experiences of any kind could trigger psychotic episodes in succeptable individuals. Such people could have a psychotic episode without any being drugs involved. People with family history of mental illness would do well to be extra cautious before engaging in any activity that might result in an emotionally intense experience.
[1] - http://www.amazon.com/LSD-Spirituality-Creative-Process-Grou...