I agree that it is sad, but it is hard NOT to let such an image influence us. Take Japan, for example, where Versace is a brand loved and consumed heavily by the yakuza. It makes the rest of us feel a little odd about wearing that shirt because nearly everybody immediately makes that connection (I know this from experience... as an American who came to Japan and, upon wearing a Versace shirt to dinner once, had everybody glancing nervously around the restaurant the whole time).
It would be nice NOT to have such images/influences, but it is also the case that Versace's history of indulgence and excess, which fit so well with the 1980's, established a certain type of "lifestyle", "image," and "customer" that is difficult to get away from. That customer and that image WAS Versace. Now, everybody has moved on. I think that Versace, much more than many brands, was always about a type of lifestyle. The clothes were a representation of that... but I don't think it was ever JUST about clothes. That makes it harder for Versace to move on and establish new connections with new customers.
Think of this as opposed to, say, Jil Sander... which is all about clothes and almost nothing about lifestlye. I can't picture what Jil Sander does with her time... but the images of Gianni tanning himself in his Miami palazzo are impossible to forget.
John