I was going to put a whole back-story for this question here, but thought it'd be better as a Google+ post instead, for reasons that should be obvious to anyone who reads it.
So, during high velocity returns, is there a chance that a parachute will fail if the capsule is travelling too fast when it's deployed? If so, what's the optimal speed/altitude range for deployment?
If speed is not the cause of these failures, what is, and how can I mitigate it?
I should also say that I'm using Mechanical Jeb. For reasons explained in this question, I now always bring the MechJeb unit back with me. In the case of the most recent failure, the MechJeb unit was positioned between the capsule and the parachute, something that had worked for me before. But for my rendezvous mission, I used one of the radial mount options, keeping the (proper sized) parachute connected to the top of the capsule.
Best Answer
TLDR: Yes, you will lose chutes from version 1.0.1
Kerbal Space Program has an advanced physics engine and while the planets of the Kerbol system are different to the Sol system, the mechanics are similar:
In real life a re-entering spacecraft is hitting air at huge speeds and that is heating the vessel. The chutes undergo huge stresses when deployed - both from aerodynamic pressure and heating. If these stresses are too great, the parachutes could simply tear off.
Version 1.0.1 of KSP brings this real life danger into the Kerbal universe. Now, if you're moving too fast when the chutes deploy, they can be "burned up". Or, even if you're not undergoing heating, the chutes can be destroyed due to aerodynamic pressures.
How can I avoid chute loss?
Not losing parachutes from heating is easy: Don't deploy them when your vessel is burning up. You can tell if the vessel is burning up by looking at it - is it on fire? Don't deploy chutes.
Not losing parachutes from aerodynamic stresses is also easy: Don't deploy (even partially) when you're going fast. How fast is "fast"? I've conducted some tests and it looks like 1000m/s is the magic number. Although it may change depending on atmospheric conditions.
Edit: After version 1.1 chutes can be destroyed going slower than 1000m/s. Look at the chute icon in the staging, it changes colour based on whether it's safe to deploy or not.