I think this can be very true of theoretical research, but when I entered grad school I was pretty interested in the applied fields. My problem was I didn't have substantial industry experience to identify the labs that were doing real applied work compared to the publishing factories that drew tenuous claims to the real world to get grants.
Not many graduate students have really substantial industry experience when they start. Internships help a lot, provided the goal is to learn (and not be pressurised to publish papers even there. :))
It was probably unfortunate that you didn't like your experience with your group; but not all groups are like that. It depends on your advisor.
