Pan-arabism was not such a bad idea. It was somehow similar to the "nation-state" idea prevalent in 19th century Europe, which, while true that generated some ugly side-effects (WW1), in the end was responsible for the creation of most European modern states as we know them today.
The same thing could have happened with pan-arabism, i.e. we could have talked right now about a modern Lybia, a modern Egypt or a modern Syria, but instead the Suez Crisis killed this possibility in its infancy and gave guys like Nasser (or Assad in Syria and Gaddafi in Lybia) reason to take even more power in their hands.