Noone was wrong with the 1st generation suspension. Subaru just wanted a more mature ride and less peakiness in the handling for the BRZ. It made sense for their target audience of slightly more adult fan base than Japan's AE86 drivers who are wild drivers and Scion's younger crowd who didn't mind the slightly stiffer ride. Ironically, with a softer rear setup there was a tendency to run out of shock travel faster on the BRZ over rough terrain (ironic huh? since Subaru is the one who's famous for WRC).
The shock travel issue could be solved with rear progressive spring rates, which combined both worlds, and in fact Subaru provided such a suspension in their tS series. I assume that they couldn't offer this setup in the base models, since progressive springs require a much more advanced damping technology and there were cost considerations. To my knowledge this setup is not offered in the 2017+ cars either.