Vassell, who hasn't played for England since missing in the Euro 2004 penalty shoot-out against Portugal, stepped up for City but United held on for a 1-0 win after Vassell shot straight at United keeper Edwin van der Sar.
Joey Barton missed a spot-kick in last week's 2-0 home defeat by Aston Villa, meaning City finished with just 10 goals from 19 home league games this season - a record low.
"We've missed 2 penalties in the last 2 games, which have cost us dearly," said Pearce. "They are great opportunities to score goals, and you've got to take them - and United did.
"Vass stepped up on the day, and credit to him for wanting to take it. If he misses it, people say 'Why Vass?' If he scores, it is a masterstroke, he was the one that wanted to step up and take it so we can't criticise him for that."
City fans created a great atmosphere at CoMS after each fan was given a free scarf inside the ground and Pearce praised their support.
"They could do no more for us," Pearce added. "They were absolutely magnificent and we're very disappointed that we did not get anything out of the game for them, especially when with 10 minutes to go the ball's on the penalty spot. We're bitterly disappointed."