It's because they have no clue how to play man dense. The only one that does is Iggy and that got him in foul trouble. All you have to do is get up in your man's face. This isn't the NBA, you can crowd them. That makes it harder for them to get to their spots on the floor. That sag off of your man defense is not gonna work, because a team with aggressive shooters will exploit that.
The team has 3 "elite" PGs, but why do they play better with Lebron running the offense? Also, Melo is clearly the best post player and the best midrange shooter.
And this can't be said enough - Deron Williams fell waaaaaay the ef off. He should've stayed under Sloan's tutelage.