Don't bin it.
Unless the Dyson packed up literally the moment you ran over the loose wires, I doubt it is a loose wire problem. The smell is consistent with a dying motor. Of course, I cannot be certain if it is just a loose wire. But if the wire got pulled out of its connection, the machine should in theory just stop working - you have a burning smell too.
I booked a £69 fixed price repair, all parts included (including bits unrelated to the fault save the three small plastic tools on my DC04). As two of the three items that Dyson replaced would have cost me £55 for just the parts, I feel that was a good deal.
For the £69 they'll almost certainly repair the loose wire problem at the same time (ask Dyson if it is included).
See these two threads on burning smells:
http://www.howtomendit.com/answers.php?id=134134
http://www.howtomendit.com/answers.php?id=2320
David, November 2010