Yes, it is going to set back a team. But it shouldn't set back a team so that they get behind by 26 points to a lower tourney seed, or have back-to-back blowout losses against a bad KSU and a mediocre KU, and another loss to a bad OSU team.
Where does ISU want to go? If ISU wants to seriously contend for a regular season Big 12 title and make a deep tourney run, they need to figure out an offensive scheme that doesn't require complete athletic superiority over the opponent (because that isn't happening night in and night out in the Big 12), or one guy playing out of his mind (like CJ did until the opponents figured out that they needed to neutralize him) to open up things for the other guys. Otherwise, the current scheme works well enough to do well with a cupcake preseason and beat enough mediocre conference teams to make the tourney.
And depth certainly doesn't hurt, because, you know, injuries...