My guess would be availability. Every bike shop (and REI) in the country has neato-bandito battery-powered light displays. Plunk down the card and walk off with one. If you learn enough that you want a dynamo, then you have to figure out where to get it, and the light, and how to build the hub into a wheel... Plunking down the plastic is so much easier.

Another possibility is that some of us old farts remember the bottle generators from the 19X0s. Hooked up to a flashlight bulb, you could almost see the ground. That was before halogen bulbs, much less high-powered LEDs. (Probably LEDs, period!) Which is brighter, the flashlight bulb you remember from 50 years ago, or that searchlight of a triple LED in that display case right there?!