One might argue that injuries kill tournaments in MMA by forcing substitutions due to prolonged medical suspensions, but it seems that the 2011 MMA season has shown that training injuries suffered during long layovers sideline more marquee match-ups than anything else.* Georges St-Pierre's recent knee injury has affected not only one UFC card but two now as the extent of his injury has become known. By contrast, Bellator has had a fairly successful 2011, running several successful tournaments with minimal disruption
I argue that the key to a successful tournament is allowing a layover between rounds that is just barely long enough for the fighters to be medically cleared and for them to complete a training camp that is of sufficient duration for their next fight. I think that keeping fighters on the sidelines for 6-12 months due to a lack of compelling match-ups only risks training injuries that delay their return. The tournament format more often than not makes desirable match-ups happen, both on paper and in reality, because every divisional top-8/16 player is always in the mix and is scheduled to fight around the same time. I think Bellator has demonstrated that in 2011.
Finally, if a substitution in a tournament must occur due to a rare prolonged medical suspension, then surely it is an acceptable loss that is no worse than creating an interim title. In K-1, injuries in past tournaments have turned substitutes into champions, but it created no lack of clarity in the title picture that next season's tournament couldn't resolve. A perfect storm scenario with multiple substitutions is unlikely, and even if it happens, it does not mean it will always happen; Bellator's success speaks to that as well. At any rate, I think this is preferable to a title picture that is consistently muddled--and from a fight promotion's standpoint, big dollars that are lost--by injuries suffered outside of the cage.
*I am assuming that the fighters pulled out due to predominantly non-electively treatable injuries, which seems to hold true for people like Cain Velasquez, Shane Carwin, and now GSP. I don't think that elective treatment counts against the tournament format because the fighter could just wait until the tournament is over.