This is pretty darn bad. A country with nuclear weapons is falling to the Taliban. Their population (and by default government and Army) is at best neutral towards the lawless factions in their completely ungoverned Northwestern Frontier Province who (in an rather optimistic view) aid and abed terrorists. Look at what happened the last time the Taliban was in charge of a country? That country didn't have nukes. This could be bad, real bad.
In the two nation race to collapse I think Pakistan just pulled ahead.