I agree with MikeL2's analysis. I am not going to get carried away with all of the usual over reaction to a disappointment. The main reason Italy won this time around was that they have more top level players at the moment than England. This does not mean we will never beat them again and it does not mean that our football sucks. These things go in cycles and we will see better and worse England sides than the current lot.
I liked Italy last night. I never thought I could type that! There was little cheating and they played open, attractive football fairly and in a good spirit. In fact, considering what was at stake, it was one of football's better occasions. Italian football has always conjured up images of catenaccio and shirt pulling for me. That was hardly in evidence last night. If anything, England were more guilty of it than Italy.
England's off the ball running was pretty poor. At times there were attackers (Rooney mainly) trying to hold the ball up with several Italians around them - and still no passing options appeared. You can't surprise defenders by running the ball at them when they know that is your only option.
At the end of the day, it is not a bad achievement to reach the quarter finals with a set of players who are merely average by international standards. No doubt exceptional players will emerge in the future, but for the time being we fans will have to live with more modest expectations.