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Personally I think it's your fault. You should always do good quality work, no matter what the budget. There should be no quality vs price factor, you should just do the best job you can and charge people accordingly. I think the problem is not charging enough for the contract you took on, and letting the customer "work you" too much to settle. This left you with a shitty job to do, for shitty money, and in turn you half-assed it because you were unhappy with the deal that you made.
Anyways now that you're in this position, I would try to work out an agreement that leaves both of you satisfied.
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