Loads of attrition is normal. In fact, the last thing any coach wants is having a guy use up a scholarship spot if he's not likely to ever see the field. That is why Saban does what he does. The more guys you get on campus, the better chance that you find good players.
The 5th year seniors from the 2002 class went to three Rose Bowls, so it certainly has to be characterized as a good or at least good enough class. Out of the 21 guys in that class, Quinton McCoy failed to qualify, went to prep school, came back to Michigan and flunked out. Matt Gutierrez transferred to Idaho State after injuries and Chad Henne prevented him from seeing the field. Pierre Rembert transferred to Illinois State. Larry Harrison was kicked out of school for showing his dong to people who hadn't asked to see it. Tom Berishaj and Kevin Murphy appear to have just left the program.
That is 6 of 21 who just left the program without making any real positive impact. Mike Kolodziej started a handful of games, but also left with eligibility remaining after an illness, bringing the total to 1/3 of the class leaving before their eligibility expired.
AND this is a class that didn't have enough attrition. At a time when Michigan only signed 19 players (class entering in 2006), Carl Tabb received a 5th year of eligbility. He made one catch for 2 yards. Darnell Hood made 18 tackles as a backup DB and no other notable plays (INT, FF, etc.) in his 5th year. He also got to carry the ball twice for 12 yards. Jeremy Van Alstyne made 6 tackles in his 5th year with no notable plays. Brian Thompson made one tackle. Obi Oluigbo made two tackles, but somehow managed to force two fumbles and recover another one. He also caught two passes for 23 yards.
That is five players we missed out on going forward in exchange for one year of production that surely could have been mimicked by true freshmen. Five guys who would have been seniors in 2009 or 2010. If we had used those scholarships on recruits, do we maybe offer a guy like Eric Gordon? Even if only one or two guys pan out, the team could have been in much better shape the last few years, especially if those guys played on defense.
So yeah, attrition is good. The only kind that isn't is when a guy leaves and ends up being a solid player somewhere else (Mallett, Fargas, Mundy, etc.)