If diamonds are used as a coating for space shuttles how can they still be so delicate?

No. 1 - No one is rich enough to use actual diamonds all over the space shuttle. It'll leave diamonds costlier than a liver transplant.

No. 2 - They DO have carbon carbon tiles all over, which emulates the diamond structure in a number of ways, except for one-burning.

So, more than the cost, it's the burning part which prevents us from making jewelery space shuttles. If you didn't know, diamond will also burn, just like coal or graphite. Finally, its just carbon! It's like whether a guy is Chinese or Australian, he finally uses eyes to see, not ears. These tiles are lab-made, hybrid, modified, diamond-like structured things, kind of fireproof.

No. 3 - Space shuttles aren't delicate babies. Else they wouldn't be able to handle temperatures >4000 degrees C, friction and g-forces over such long periods. While re-entry, the procedure's delicate, not the shuttle. You have to enter in a very small angular range. Less than that, you'll bounce off like a flat stone on water, more than that and you'll fall down with more than required acceleration and less friction. Here you can't say they're delicate -- because it'll be impossible to stop the shuttle in time, then -- simple physics can show that easily.

What happened in Columbia which I think made you to ask this question, was that during liftoff itself, a foam tile (NOT the carbon) from one of the rocket boosters fell off. Now, nobody cared since they are disengaged in 8 minutes only, so no big deal. But what they failed to notice is the place where it fell-the shuttle wing's edge. It made a small crack, since a space shuttle tile can obviously not be designed for falling foam tiles from great heights! During re-entry, when temperatures soared, heat entered through the fissure, burnt the electric controls and the rest is history. Basically it was just ill fate-nobody could dream the silly foam tile could do such a thing.