I'm a little ambivalent about Yugoslavia's demise. It was an essentially good idea gone bad.
The idea of bringing most of the Southern Slavs into a single state, born during WW I and heavily encouraged by the British pro-Serb historian Robert W. Seton-Watson, was motivated by both security concerns (a single Southern Slav state would be better able to withstand Austrian, Hungarian and Russian influence in the Balkans) and as well in modern terms it would better be able to avoiud a "failed state" fate. The "Right to Self-Determination" in Wilson's 14 Points was ill-defined and took by many to imply statehood, but if every single ethnic and religious group in Europe is given a state of their own then you're going to have a whole group of unviable states incapable of providing basic services, with heavily radicalized populations - which adds up to lots of wars. A state isn't just a representative body; it provides services (tax collection, justice system, social order, education system, economic system (currency policy, etc.), external security, etc. A state needs certain resources to be able to provide these services - which means it must be viable. Most of the territories that would come together to form Yugoslavia were feudal holdovers largely untouched economically or socially by the modern world (with the exception of Slovenia, and to a lesser extent Croatia). A union of the regions into a single centralized state was a very sane idea, both in terms of external security and internal development; the final product was much more than the sum of its parts.
Unfortunately, the way Yugoslavia was cobbled together pretty much doomed it, and I'm not even sure it could have been done differently. There were two major camps during the war, one that promoted a Croat-led union (Trumbic) and one a Serb-led union (Pasic). The reality that the Serbs already had a state overwhelmed the opposition and in the end the "Kingdom of Serbs, Croats and Slovenes" was born by Serbia merely absorbing the other regions. The Serbian administration pretty much stayed in place and simply took on many non-Serbs into its service. The bloody Serb Karadordevic dynasty got the throne, and Belgrade became something of an internal imperial capital. Because of the 1990s we look askance at Serb nationalism but the Croats were just as strident, if less effective. Both spawned terrorist groups, just as both spawned people who genuinely attempted to make the union work. Yugoslavia had many enemies (Italy, Hungary, Bulgaria) but managed to survive until being savaged by Hitler.
Tito was both a boon and a bane for Yugoslavia. Allied policy in supporting him during the war exclusively, ignoring Mihailovic and the royalists, weakened Allied policy options after the war and Yugoslavia consequently fell into the Soviet sphere. The split in 1948 forced Tito to take more realistic measures in dealing with and balancing the republics but the dictatorship's response to ethnic tensions was simple repression - which as we all know burst forth violently in the decade after Tito died. So now we have once again a collection of mini-states with ill-defined borders and seething ethnic tensions, with weak economies and weaker economic prospects. The EU is the only hope for these statelets, but EU taxpayers get your purses ready because the kind of economic infrastructural development that needs to take place in the region got harder and harder to implement with each fragmentation of Yugoslavia.