Although her writerly transgressions--apparently, instances of plagiarism--are by no means the same as those James Frey committed, Kaavya Viswanathan seems to be earning a similar amount of press attention regarding her highly-touted (and highly-paid) debut novel, How Opal Mehta Got Kissed, Got Wild, and Got a Life. Instead of sending you to many different sources to read about it, I'm just going to recommend that you keep up with the daily coverage over at GalleyCat.
Don't get me started on the faults in education today (yes, even at my beloved Harvard, where Viswanathan is a sophomore). Crediting others for their ideas and/or words isn't something that seems to matter very much anymore. And as students launch into the writing profession there's little reason to expect more specialized attention to such matters. Even in my MFA program (at another institution) I was treated as a totally unreasonable soul for suggesting that the curriculum should cover source documentation (MLA, CMS...something!) for the single "critical" project we had to do.
If writing educators don't attend to ethical issues where "critical" writing is concerned, I don't know how we might begin to hope the situation can improve with "creative" efforts. But it's obviously high time to think about some real ethics education for creative writers.