Apparently, this malfunction caused the flight to not reach its full height. According to <a href="Available <a href="http://www.msnbc.msn.com/id/5261571/?GT1=3584:

Melvill's exultant comments capped SpaceShipOne's wildest ride since its rollout a year ago. During the flight, he had to cope with a serious glitch with the flight control system that knocked the plane 22 miles off course in a matter of seconds. Melvill switched to a backup system that he said "saved the day."

But the problem meant the 63-year-old South Africa native had to cut his spaceward rise short — and the plane's designer, Burt Rutan of Mojave-based Scaled Composites, said the unofficial data indicated that the craft reached a top altitude of 328,491 feet (100.12 kilometers). That's just 408 feet (124 meters) above the internationally recognized boundary of outer space.

...

But serious concerns arose after an initial review of the flight data. Rutan said SpaceShipOne would not fly again until the source of the flight control problem was identified and fixed.

"The anomaly we had today is the most serious flight system safety problem we have had in the entire program," he told reporters.

In addition, Melvill had to deal with a roll of the rocket plane during its ascent, and was surprised by an unexpected booming sound. Afterward, Melvill and Rutan said the boom was apparently caused by the buckling of a fairing that was added to the rocket plane's engine nozzle for this record-setting flight.