That doesn't make sense. You need to move that out of there. ..and I have a nice solution: when a spring contracts it looses energy, therefore you can dampen just the springs energy using this fact. I'll explain when I get back from bowling.
To elaborate: the reason why what you have now is incorrect is, imagine the case where two points connected by a spring are moving quickly in the same direction, and maintaining the correct distance apart. A force will now be generated by your dampening component, which is incorrect.
The easiest way to dampen the system is to decay the velocity:
velocity -= DAMPENING*velocity;
The reason why it may appear that you're getting the correct dampening behaviour at the moment is because what you have is actually equivalent to what I am suggesting if you have a fixed number of springs (commutativity of addition). However you'll notice problems when you start adding more springs, and at some point (K*DAMPENING > 1) for K springs, it'll break altogether. So yeah, move that out of your spring force calculation, and dampen the velocity of each point independent of the springs attached to it.
However there is also a way to dampen the energy associated with a spring:
Consider the fact that the amount of energy held in a spring increases or decreases with the extension of the spring - we won't worry about the exact formula at the moment. So, if two points connected by a spring move towards each other when the spring is extended beyond its resting length, energy is being transfered from the spring to the particle as kinetic energy (or into another spring or whatever). Similarly, if it is compressed below its resting length, and the points then move away, energy is again lost from the spring. Thus if we dampen the force generated by the springs under these conditions, we can dissipate energy without tampering with the magnitude of the points velocity.
I've tested it with my jelly, and it has worked wonders for its stability.