ESPN
In past seasons, the NCAA tournament selection committee used the "s-curve" to fill out the brackets. The result put the lowest-ranked one-seeds with the best of the two-seeds and the number one overall seed with the weakest of the two-seeds.
However, according to committee chair Mike Bobinski, the s-curve wasn't used this season (via ESPN.com), putting Louisville in the same region as Duke, the second-best two-seed (#6 overall). In addition, Louisville is in the same bracket as Michigan State and Saint Louis, two teams many considered Final Four contenders before the bracket was revealed.
Louisville wasn't the only team to get screwed. Oregon and California should have been 11-seeds based on their overall seeding (#43 and #42, respectively), but because the committee had to cater to certain regions and avoid certain matchups (e.g. rematches), both got bumped down to 12-seeds.