I got to watch yesterday's first attempt via webcast. The launch was aborted shortly after engine ignition. (Unlike the space shuttle, which uses external solid fuel boosters that are going to keep going once you light then, the Falcon I uses liquid propellants pumped into the engine chamber.) There was an automatic shutdown by the computer and the vehicle was quickly put into a safe mode. They were then able to isolate the problem, recycle the system, and launch only an hour later!
They lifted off, had a successful stage separation, cleanly released the fairings (protective nose cone around cargo), and ran both engines. They shut down early due to unexpected oscillations in the second stage (visible at the end of the onboard launch video). But they still reached an altitude of 200 miles, well into outer space (62 miles). So this was a successful demonstration flight for testing the hardware.
Launch videos: High Quality and Low Quality.
