The ongoing Newsweek saga has given the Bush White House and its right wing jihadists what they see as a golden opportunity. Their simple goal is to use the Newsweek case and the Rathergate episode before it to wage a full scale assault on the credibility and objectivity of "mainstream press." In its place, they seek to substitute their own manufactured, alternate reality.
Central to this campaign is the assault on media reliance on anonymous, single-sources. As Scott McClellan put it:

I think there's a certain journalistic standard that should be met. In this instance it was not. This was a report based on a single anonymous source that could not substantiate the allegation that was made. The report has had serious consequences. People have lost their lives. The image of the United States abroad has been damaged.

The trouble for McClellan and the Bush administration, of course, is that they have a single-source addiction of their own. That dependence anonymous sources has been central to selling the American people and the international community a range of Bush policies. As it turns out, those sources and their information have not only been wrong, but in some cases were known to be wrong.
The consequences, as Scott McClellan might say, have indeed been serious. Lives, and just as important, American credibility, have been lost.
The following is just a small sample of the work of the Bush single-sorcerers:

In his 2003 State of the Union Address, President Bush cited British intelligence for his claim that Iraq had sought to purchase uranium in Niger. Not only had been Bush been warned against the weakness of this claim prior to the speech, but it was conclusively debunked by Ambassador Joseph Wilson afterward. The administration not only persisted in claiming that Saddam sought yellow cake in Africa, but sought to destroy Wilson and his CIA agent wife Valerie Plame in retaliation.

In February 2003, Colin Powell made a polished and compelling case at the UN regarding the imminent dangers of the Iraqi arsenal weapons of mass destruction. Virtually every claim, from the aluminum tubes and mobile weapons labs to the stockpiles of chemical and biological weapons, was without foundation. The Bush administration, the Robb-Silberman Commission on Iraq WMD intelligence claimed, was burned by its reliance on a single source, the infamous "Curveball."

In the run up to the invasion, Vice President Cheney on MArch 16th, 2003 famously claimed that U.S. troops would be "greeted as liberators." The key source for this was Pentagon-darling-turned-Tehran-darling Ahmed Chalabi and his Iraqi National Congress. The price of this fantasy for the American people, "people have lost their lives."

The growing threat from the Iranian nuclear program is one of the central challenges in American foreign policy. While the Europeans and the IAEA are engaged in the process, much of what came to be known and continues to come to light is provided solely by the murky Mojahedin-e-Khalq (MEK), staunch opponents of the Tehran regime. In Iran, the U.S. may be about to replay its fiasco with the Chalabi and the INC. (Note: the May 18th article in Newsweek will be dismissed by the administration, as it was co-authored by the same Michael Isikoff of the Koran desecration dust-up.)

Central to President Bush's ability to sell the Iraq war (and to his reelection) was establishing the link between Iraq and Al Qaeda, between Saddam Hussein and Osama Bin Laden. Throughout 2003, Vice President Cheney was proclaimed the existence of these ties, citing a report from Czech intelligence that 9/11 ringleader Mohammed Atta met with an Iraqi agent in Prague. The 9/11 Commission thoroughly debunked any notion of operational ties between Iraq and Al Qaeda in its final report.
The listing above is just a small portion of the administration's shocking reliance on single sources as the basis for policy. Don't expect any changes any time soon, though. They have their one story, and they're sticking to it.