She's clearly infatuated with him, but that's pretty common when two people first start dating (especially when they're younger). Does that mean she's "bad" for him, or that he could do better than her? I'm not so sure. It's only been one week, so it's hard to make any judgments this early in the relationship. Also, as an outsider, you can only see so much. Maybe they're a great fit for each other, and while she may seem a bit neurotic at school, they could get along really well in private.

I know you're disappointed that he didn't go for you, and I understand that you want the very best for your friend/crush... but unless you see something that's CLEARLY wrong with his relationship, I wouldn't criticize it. As his friend, it's your job to bring up any concerns, but make sure they are legitimate concerns (ex. she's clingy, abusive, or unfaithful). You have to be very careful about how you address these concerns, because you don't want your judgment to be clouded by your feelings for him.