You are partly right. Cold affected the canister. I use a piece of blue foam (from the ever popular blue sleeping pad) on snow. However, canisters work better at altitude, not worse due to the pressure differential-liquids boil off at lower temperatures the higher you go. That's why you see old photos of climbers at high altitude using hanging canister stoves in the Himalayas. In spite of the cold, they are so high up the canisters still work. My Micron worked at 7,500 at about 25F or a bit less using a small Snowpeak canister.

Here is a pretty good explanation without a lot of physics-
http://www.backpackinglight.com/cgi-bin/backpackinglight/canister_stove_faq.html

If anyone knows of a test done on canister stoves in an altitude chamber, let me know.