Most of the reasons have all been covered above: more mass appeal, no need for constant coin feeding, technological improvements, but the big one for me, and the reason I'm glad games have gotten easier, is story and atmosphere.
I play video games for the same reasons I watch a movie or read a book: they're immersive, captivating, thought provoking and/or entertaining. The first time through on Bioshock I think I played on easy, because I didn't want a challenge. I played through on normal or hard or something next time and actually dying was just annoying. It didn't add anything to the game. It would be like a movie rewinding itself every few minutes or having to flip back a chapter in a book occasionally and having to re-do what you already did. So yeah, I definitely do not play most video games for a challenge.
Some games I do play for a challenge. I used to play Mechwarrior 4 in a competitive league, which was tough, and I play the Starcraft II beta, which is also a big challenege (unless I get matched up with a total newb). Any head-to-head arcade game is like that too, like Tetris or something. When you're playing someone who's better than you it's a big challenge. Me and my friend are doing Halo 3 on Legendary right now, which really isn't as hard as I thought it would be, but still, we can't just run through never dying like on easy or normal.
Challenge was all older games had going for them. You don't play early Mario games for the atmosphere or storyline, you play them because they're an amusing challenge, and when you get really far or actually beat it you feel accomplished. I don't play games to have a sense of accomplishment. Unless I'm in a certain mood, a game being really difficult just makes it unpleasant and definitely not fun. Why would I play a game that's not fun? Just for the sense of accomplishment? Yeah, fuck that.
Also: L4D2 being easy on expert? I don't see that being possible. I've played with plenty of groups and expert has never been easy. Less challenging than you want it to be, maybe. But I don't think anyone could ever just waltz through on expert.