The bad aspects to touchy feely...
As some people have said there is no one type of management technique to rule them all. Good management is dependent on the manager, the employee and more importantly the situation, so basically the approach is different every time.
Whilst there are plenty of positives to the touchy feely management style, there are some really bad too and not just for the manager or team, but for the person in question.
For starters if a person isn't performing well, with the touchy feely style someone needs to mentor them, find out what is wrong, and/or send them onto training courses in hope that an improvement is made. Whilst this is happening either the person's responsibilities stall, or the rest of the team has to take up the slack. If the role stalls the team can look bad, if others are doing the person's work then this can easily create a bad atmosphere in the team.
For the person in question, each time they get dealt with there is a good chance that their role diminishes and basically they get sidelined out of chances to grow or worse out of a job.
Personally if I cock up I rather have my manager tell me straight to my face rather then have it drag out, of course after work have them take me to a pub a get me drunk when I've resolved the issue!