Are these companies simply wrong and are actually hurting themselves by overextending their human resources?

Yes, unquestionably. We've known how human productivity works for over 100 years now. This knowledge has been "forgotten" due to the effects of tough, largely unprotected labor markets. If the guy at the next desk over stays an hour later than you every day, he'll look like he's working harder, so he'll be less likely to get laid off. Once you have multiple people thinking that way and no opposing structure to encourage cooperation, you get a classic status arms race.

Why Crunch Modes Doesn't Work: Six Lessons

Executive Summary

When used long-term, Crunch Mode slows development and creates more bugs when compared with 40-hour weeks.

More than a century of studies show that long-term useful worker output is maximized near a five-day, 40-hour workweek. Productivity drops immediately upon starting overtime and continues to drop until, at approximately eight 60-hour weeks, the total work done is the same as what would have been done in eight 40-hour weeks.

In the short term, working over 21 hours continuously is equivalent to being legally drunk. Longer periods of continuous work drastically reduce cognitive function and increase the chance of catastrophic error. In both the short- and long-term, reducing sleep hours as little as one hour nightly can result in a severe decrease in cognitive ability, sometimes without workers perceiving the decrease.

Managers decide to crunch because they want to be able to tell their bosses "I did everything I could." They crunch because they value the butts in the chairs more than the brains creating games. They crunch because they haven't really thought about the job being done or the people doing it. They crunch because they have learned only the importance of appearing to do their best to instead of really of doing their best. And they crunch because, back when they were programmers or artists or testers or assistant producers or associate producers, that was the way they were taught to get things done.

Another good article about the history of the 40-hour work week is Why We Have to Go Back to a 40-Hour Work Week to Keep Our Sanity on AlterNet. I recognize the political leaning of AlterNet may be offputting to some, so consider yourselves warned. I also don't necessarily endorse their theory that Asperger's Syndrome is to blame for the rise of overwork in Silicon Valley.