The only real distinction between a factory-made and a mined diamond is that the factory-made diamond has a lower cost to the environment and is less likely to be associated with human suffering.
Edit: add reference:
That's not true. There are other differences, including impurities, amounts of isotopes, optical properties (due to the impurities).
You're right about the human suffering part.
The diamond industry, through its promotional efforts, backed itself into a corner. The goal was "flawless" diamonds, that is, perfect crystals. This put them into competition with the semiconductor materials industry, which makes perfect crystals. There are now 140mm diamond wafers. A TV expose:
http://www.youtube.com/watch?v=JhnvZDLizlg
Then there's the Cubic Zirconia Channel on daytime TV.