Although I was mildly disappointed, I wasn't completely surprised and don't look at it as a "fail". Keep in mind that the event is the Google developers conference, not hardware engineers conference. Last year's unusual hardware announcements were widely leaked ahead of time, while this year there were only wishful rumors.
Also, the hardware last year made sense, as Google really needed something to promote the Android ecosystem and encourage developers. All that hardware from last year is still relevant in terms of its technical specs, so the need for a May announcement of new products wasn't very pressing. Android has solidified its presence so significantly during the past year that new or updated Nexus hardware really wasn't a priority.
Lastly, I doubt that Google cares if you give your money to someone else when buying a tablet, as long as it's an Android tablet. They don't really make any money from selling hardware, which is why this year's conference is, for the most part, about the things they do make money on.
With all that said, it was still kind of a bummer that no N7 announcement was made. Here's hoping for summertime!