are just fine. Remember when we suckerpunched them 2-1 in the FA Cup final? Everybody then decided that they needed a fox-in-the-box and the resulted knee-jerk brought Francis Jeffers to Highbury -- a colossal 11 million quid mistake. It later turned out Arsenal didn't need Jeffers at all to win the EPL and FA Cups with panache. Arsenal haven't conquered Europe with the same panache, because, simply, the ECL don't have as many cannonfodders as the EPL.
The problem with Arsenal is that they occasionally laid an egg (I don't want to accept it's just simple that they're not mentally strong as they need to be -- but it might be just that), hence results like 0-3 to Inter or 1-3 to Bayern happened. Watching Arsenal's return match against Bayern, I failed to see their supposed impotency. Bayern had chances (also important to note that Arsenal's backline was rather depleted) but for the most part they were pushed back and at times had to defend desperately. Arsenal repeatedly created dangers in Bayern's box, but failed to convert into chances and goals (frustration? insecurity?).
The main criticism is Arsenal haven't gone past the ECL's quarter final since ever. In 2001, they lost to Valencia on an away goal. 02 and 03 they failed to advance beyond the second group stage (again, choking at the wrong time, losing 0-2 to Deportivo at Highbury in 02 and let Roma drawing 1-1 at the same venue in 03). In 04, they got knocked out by Chelsea, another English club.
The pattern here is choking rather than ineptitudeness.