To be honest I think the fact Nadal didn't withdraw from Halle is more surprising than his actual defeat. Brown is a decent player and Nadal is likely still recovering from the French. I doubt he would have wanted to progress too far at Halle either.
As for Murray, he looked knackered at the end of his run at the French so he can't really afford a deep run into Queen's if he wants to challenge at Wimbledon, the break should do him good.