In general, anytime you are debugging or developing a Dynamic Data website, one should goto the Site.master file and set the ScriptManager's attribute EnablePartialRendering to false:
<asp:ScriptManager ID="ScriptManager1" runat="server" EnablePartialRendering="false"/>
This will make exceptions more apparent that otherwise seem to be swept under the rug because of the use of Update Panels that wrap around the DetailsView, FormViews and GridViews on the List/Edit/Insert/Details/ListDetails page templates.
I think the real problem you are running into has something to do with error handling and update panels. When debugging in IE, do you see a little exclamation point in the bottom left of the screen? If so, click on it and you will see the javascript error (Sys.WebForms.PageRequestManagerServerErrorException) that has occured because of the unhandled exception.
For more on this, check out ScottGu's Blog on the topic.
@Aaron's comment: that is too early to capture the errors he is referring to. I think, in this scenario, he wants to handle the Updated event because the EntitydataSource will not actually throw an exception until after it gives this event's handlers a chance to run: (MSDN):
If an error occurs when changes are
persisted to the data source, the
Updated event is raised and the
Exception property of the
EntityDataSourceChangedEventArgs
object is set to the returned
Exception. If you handle the exception
in the Updated event handler, set the
ExceptionHandled property to true.
This prevents the exception from being
raised again. When you specify a value
of false for the ExceptionHandled
property, the EntityDataSource
re-raises the exception.