Juan Cole has an excellent entry on the whole Koran and Guantanamo controversy. Some highlights:

Isikoff's source, in other words, stands by his report of the incident, but is merely tracing it to other paperwork. What difference does that make? Although Pentagon spokesman Lawrence DiRita angrily denounced the source as no longer credible, in the real world you can't just get rid of a witness because the person made a minor mistake with regard to a text citation. It is like saying that we can't be sure someone has really read the Gospels because he said he read about Caiaphas in the Gospel of Mark rather than in the Gospel of John.

The government has strong armed Newsweek into totally retracting the article, but I think it is a shame. I believe the statements about how the Koran was treated in Guantanamo, but Newsweek is being spineless. They reported the truth and when the government doesn't like it, they are running with their tail between their legs. The Freedom of the Press is supposed to be there to keep the government in check.... Newsweek appears to have forgotten that.

Here is another good quote, where he presents an article from last year that reveals the same treatment of the Koran:

Nor is this the first such indication of this sort of incident. On August 18, 2004, ANSA, the Italian news agency, wrote of the families of detainees from Bahrain at Guantanamo:

"The families' anxiety grew after the publication of a report by the Bahrain Centre for Human Rights (BCHR), which contained information about tortures and maltreatment of prisoners. The report, based on testimony by three former Guantanamo prisoners,
Shafiq Rasul, Asif Iqbal and Rhuhel Ahmad, defines as brutal the methods of the U.S. jailers. According to the report, prisoners were brutally beaten and compelled to watch other prisoners sodomising each other by force. The 150-page document says reptiles were taken to the cells in an attempt to force prisoner confessions, while the Koran was thrown into the toilets before the eyes of the detained."

I have no doubt the US interrogators did this to the Koran. They just didn't want the public to know about it.