There's a laundry list of things which contributed to overall craptitude of the prequels. Among other larger ones:

Lucas' hand-holding

few practical effects/sets

characters that look like cartoons

slapstick moments

poor script and story arc

poor directing and editing

wooden acting

lame fight choreography (Eps II and III)

CGI overload

Anyway, as for the "fatal" flaw, I can easily condense everything into one point, and that is simply that G.L. wasn't interested in making the best movies possible. Personally, I wish it was the opposite, and that he would want to make something worthy of originals. Of course this would actually involve him relinquishing his stranglehold of the franchise while allowing for other ideas and other, more talented people to make some decisions. This did not happen.