The only real problem with the waterfall model is that the original book didn't mention iteration. the author thought that it was too obvious to mention. Obviously once your customers have version one of your product, you are going to collect detailed feedback from them and use that to inform the design of cersion two. He probably didn't envision companies making a prototype in two weeks and making version one available to the whole world a month or two later, but that is not a flaw in the model.