I agree with the personal integrity part but surely that applies more to private sales.
If you are using an intermediary like Sedo who are doing a crap job on your behalf, basically unresponsive and all very mirky with regards to .uk then it's not really poor business practice to withdraw from a deal I don't think.
You posted the auction under the assumption they were going to use their clout to bring in serious bidders and clarify things to buyers. They failed to deliver IMO.
Regardless of Sedo's shoddy performance, it would not be right nor fair to punish the buyer who placed his bids in good faith.