Don't feel too bad. Just because you lost by a dollar, doesn't mean your competitor only bid a dollar more than you. He may have bid $100 more than you, but eBay's "incremental bidding" system only raised the bid by a dollar.
There's been lots of moral/ethical debate about sniping... but, remember, eBay's system allows for it, and bidding in the last few seconds of an auction, when your competition doesn't have time to re-bid, is a smart move, if you really want to win an item. (No guarantees, however.) You don't need sniping software: just an accurate watch (Casio "Wave-Ceptor" watches work great, since they set themselves by the atomic clock signal from Colorado), a relatively fast Internet connection (dial-up is a problem), and a willingness to submit a single bid for the highest amount you're willing to pay. Remember... just because you bid it, doesn't mean you'll pay it. EBay will only raise the previous high bid incrementally.