The U's dominated proceedings in the opening 45 minutes at Sixfields but only had Freddie Sears' goal to show for their efforts.
Adebayo Akinfenwa equalised shortly after the restart from the penalty spot and moments later Henoc Mukendi bagged a winner, with Clinton Morrison sent off for Colchester in injury time.
"We should have been out of sight in the first half, we should have been 3-0 or 4-0 up easily," Dunne said after the 2-1 defeat. "We dominated the game and dominated the ball.
"We said to the players at half-time that they (Northampton) will come out for the first 10 minutes of the second half, they'll do what they do and we didn't stand up to it which is what I am furious about. My defenders didn't stand up it, didn't have the mentality or toughness, and that has to change.
"I have told them that in the dressing room because it's not good enough. If we had seen out the first 10 minutes of the second half we'd have won the game, because once we go 2-1 down then the crowd get up."