I'm not against the judges being critical per se, but I don't think there's a need to be cruel about it. I don't enjoy watching people get humiliated on a show by someone else.
Gromit, while I agree with this to SOME extent, I think that in some cases it's a good thing.

Take, for example, some of the bad singers on AI. Up until that point, everyone around them has been too afraid to tell them they suck, so they think they're good singers. When they get that criticism from Simon, it's probably the first they've ever heard it.

I guarantee they understand fully at that point, and probably will drop that dream.