They still haven't officially declared it lost, though it's just a formality at this juncture.
From what I've heard, they've mentioned that there was some insulation lost (presumably at lift off), and I think it was mentioned that it may have come from one of the "wings". I've also heard that they lost sensor contact with the hydrolic systems or something the like.
I feel for the families of those people. I also feel for the families of Challenger, which exploded on January 28, 1986. They just got through another anniversary and I think this will hit them hard and bring back memories of that disaster as well.
Now, would someone please shut those damn reporters up speculating that this is NOT a terrorist attack? If terrorists can bring down a shuttle at 200,000 feet going 12,000 MPH, we're in deep doo-doo.
Does anyone recall the shuttles having problems with their hydrolic systems in the past? For some reason, I think it has happened before though not to a scale where it caused a problem with the flight.