Dumbledore himself said that no spell can reawaken the dead. Isn't that the main objective of the resurrection stone? If one can't reawaken the dead then what is the use of the stone? Surely then one of the Hallows is flawed?
The Resurrection Stone exploits a loophole in the rule: you can't actually bring people back to life, but you can sort of fake it. Harry and Hermione speculate as much:
All right, even if you want to kid yourself the Elder Wand's real, what about the Resurrection Stone?" Her fingers sketched quotation marks around the name, and her tone dripped sarcasm. "No magic can raise the dead, and that's that!"
"When my [Harry's] wand connected with You-Know-Who's, it made my mum and dad appear...and Cedric..."
"But they weren't really back from the dead, were they?" said Hermione. "Those kind of - of pale imitations aren't the same as truly bringing someone back to life."
"But she, the girl in the tale, didn't really come back, did she?
Deathly Hallows Chapter 22: "The Deathly Hallows"
When he uses the Stone, Harry also notes a similarity to the memory-Riddle from Chamber of Secrets, which was nearly alive but not quite:
They were neither ghost nor truly flesh, he could see that. They resembled most closely the Riddle that had escaped from the diary so long ago, and he had been memory made nearly solid. Less substantial than living bodies, but much more than ghosts
Deathly Hallows Chapter 34: "The Forest Again"
Although we don't know exactly how it works, it's not a totally unprecedented use of magic.
So in a sense yes, the Hallow is flawed. That's kind of the point, actually, and the moral of the Tale of the Three Brothers story.