If the spaces in names were honestly corrupting game data, you should be thankful that this was exploited now instead of later. Lots of players have been using names with spaces since beta, and if this hadn't been brought to the devs attention today, the game would have officially launched in 36 hours with this bug still in. Would you rather the servers go down, and potentially wipe again after launch because of corrupted data due to the buggy character creation screen?
Its not like everyone who had a space in their name did it as an exploit to avoid being /whispered by GMs. Some people did it to have a first and last name, not even realizing the there was anything wrong with what they were doing.
Edit: Why don't the GMs have the power to change names in game, like in every other MMO ever? I'm glad that they took it down to fix it, because restarting the server (and rolling it back!) three times in an hour just to take spaces out of some names was ridiculous.