Jones saw his side beaten 24-8 by a team who were a point below them in the RaboDirect PRO12 table prior to kick off as they missed out on the chance to close the gap on the Scarlets in the hunt to finish as the second-best Welsh region this season.
"We have made strides as a team and as individuals this season but all the bad habits associated with Gwent rugby came back and we are back to square one," said Jones in the aftermath of a fourth league defeat in five.
"We've made such good progress throughout the season but we have taken a big backwards step in many facets of the game.
"We have a lot of work to do but the two weeks off we have just had cost us dearly. We lost our shape and momentum and we need to learn from that."
Jones highlighted a slow start and a weak platform at scrum time as key reasons behind a frustrating afternoon's work, with the visitors crossing for two of their four scores inside the opening 24 minutes as they dominated proceedings at the setpiece.
Man of the match John Muldoon and Rodney Ah You touched down after 17 and 23 minutes respectively, with the back rower crossing after a poor Dragons scrum and the prop powering over following a driven lineout.
The setpiece had been under pressure throughout the early exchanges and Jones changed his entire front row on the half hour as the Dragons looked to repair the damage.
"That was the worst opening that we've had all season and it took the wind out of our sails," added Jones. "It killed off any momentum that we tried to create.
"Connacht played well and their error count was pretty low, while we were pretty poor and it's not difficult to see where our weaknesses are. It's not nice to make early replacements but we were running backwards in the scrum and had to change the front row - we didn't concede a point while Duncan Bell was on."
The Dragons now sit ninth in the table, eight points behind the sixth-placed Scarlets but with a game in hand. They are still four points ahead of the 10th-placed Blues, who have also played a game more.