Just had a question about getting this error when working with a Data View in SharePoint 2007.  The person was doing everything right to do CRUD on a SQL table, but was getting the above error on update.  The mechanism itself is very appealing when working with data – and SharePoint does a great job, but you do have to pay attention to your data sources.  It turns out that SharePoint can really help you with SQL forms, but it isn’t perfect.  From the Office Developer documentation -

“However, if your data source is an SQL data source such as an SQL database or a SharePoint list or library, the field types may be specified in the data source itself. In such a case, if you use the form to enter text in a field that requires numbers and then click Save, an error message appears in the browser explaining that the data source control failed to execute the update command. This means that you are entering values in the form that the data source field cannot accept. If you receive such an error message, click Back in the browser, and then either click Cancel on the form to discard your changes, or enter values in the form fields that the data source can accept.”

As you can see – you should be careful about which SQL data sources you work with – there needs to be some thought as to what you’re going to surface because the user has to deal with the data source type checking.  Also be aware of non-nullable columns as that can be a challenge as well.  For more details on how it works, there’s a good overview at:

http://office.microsoft.com/en-us/sharepointdesigner/HA101191141033.aspx