I fold a set. In a $77 tournament. On the flop. Comments plz.

[Clayton]

PokerStars Game #12369424003: Tournament #62648705, $70+$7 Hold'em No Limit - Level I (10/20) - 2007/10/01 - 00:04:05 (ET)
Table '62648705 36' 6-max Seat #1 is the button
Seat 1: cnew27 (3060 in chips)
Seat 2: benji55240 (3060 in chips)
Seat 3: nutshot2 (2850 in chips)
Seat 4: Kismet28 (3750 in chips)
Seat 5: 4who4what (2970 in chips)
Seat 6: aussiehodgie (2290 in chips)
benji55240: posts small blind 10
nutshot2: posts big blind 20
*** HOLE CARDS ***
Dealt to cnew27 [2d 2s]
Kismet28: raises 40 to 60
4who4what: folds
aussiehodgie: calls 60
cnew27: calls 60
benji55240: folds
nutshot2: calls 40
*** FLOP *** [7h 2c 3s]
nutshot2: checks
Kismet28: checks
aussiehodgie: bets 80
cnew27: raises 170 to 250
nutshot2: raises 570 to 820
Kismet28: folds
aussiehodgie: calls 740
cnew27:


Nutshot is a 6k winner longterm on Stars when I check on pokerdb. Seems to be a standard winning player that puts a lot of volume in smallstakes tournaments.

Plz tell me I'm insane for folding?