There's a great series now available on mobile messaging.
Part 2 takes a look at MMS and says it seemed like a sure thing, but hasn't lived up to the hype. "...we take a closer look at MMS and related services and capabilities. MMS has mainly been identified with picture messaging, but there are other possibilities, including video messaging, instant voice messaging, one-to-many multimedia carrier promotions and so on. Specific applications include everything from sending pictures of yourself to on-the-fly dating services to real estate agents sending clients pictures of newly listed properties."
One reason is simply that not all phones can support MMS messaging. Some consumers may shy away because of bad early experiences, just like some customers are shying away from camera phones that are now starting to take "real" pictures with decent quality. Ease of use is also only now catching up.
Also check out the
Part 1, which talks about the introduction of various messaging types along with voice services.