Idiots.
Don't they know the way you do this is:
1) Let group form.
2) Let group do something stupid.
3) Demonize said group from all angles.
4) Rinse and repeat until everyone disassociates from said group.
5) Group ceases to exist.
That's the way they do things at all other universities. Much easier and more effective.
The reason why they banned the group is because the national Democratic Party supports infantcide. All of the members of this branch of College Democrats claim to support life, so I don't know how stupid this small group of kids is going to act insofar as the university as a whole is interested.
And, as I said, I believe the College Republicans at UC Berkeley are the largest campus organization. The Pro-Israel group has gotten in fairly serious legal trouble for fist-fights and whatnot against pro-Palestinian groups, but they're just as strong as ever.
I agree though that this is stupid. A bad PR move.