The bigger issue is (buzzword alert!) RoI. To borrow Generic_Dave's point, developers are paying for LOTR but, 90% of the time, they're delivering Gigli (or, if you consider sports franchises, Star Trek III).
I've purchased a number of games in the last year, and it has reminded me of why I stopped spending the money on day-1 retail games in the first place. I'll just cover the AAA titles I went for:
Borderlands - It was great, except that the multiplayer barely works. Oh, and I *STILL* can't finish Knox, because it crashes as soon as the end credits roll, and never saves the game. This is in addition to the other launch issues that still haven't been fixed. I'll give it a .5, because it was still fun despite the issues.
Bioshock 2 is Bioshock. They clearly spent nearly nothing on the game, since over 50% of it is just re-used content and resources. 25% is new, 25% is tacked-on multi. Why did I pay $60 for this? Because I'm apparently retarded.
FFXIII was a rail-based RPG, which disposed of all the exploration and side-content that makes RPGs interesting. Fortunately, I managed to sell it to someone, so that's only a .5 loss. Unfortunately, they didn't buy my strategy guide, so that's back to a complete write-off.
Red Dead Redemption - This starts out fantastic, then quickly goes to hell as they introduce a shooting mechanic that ruins the game. I've heard that it eventually improves, but I have little desire to continue playing at this point. .5, if I get back to it.
Dragon Age & Mass Effect 2 - The exceptions. 3 out of 6 ain't bad, until you realise that means I've essentially wasted ~$200
This isn't even to speak of the games that I was *hoping* would be good, but was saved from purchasing:
Blur - Fantastic beta, abysmal servers
MW2 - Did *ANYONE* QA this game?
STO - At least I had a beta key.
APB - At least I had a beta key.
Metro 2033 - At least I knew from the videos that it was YAGOW.
There HAVE been more big releases, of course, but I wasn't interested in the majority of them to begin with - and most of them have been "more of the same."
For those of you saying "But haven't you player anything you *LIKED*?", the answer is a resounding "YES." There were plenty of games that I've had absolutely no issues with:
Altitude
Shadow Complex
Snoopy - Flying Ace
Mega Man 10
Dark Void Zero
Torchlight
JUMP!
SWAP!
PIXEL!
Half-Minute Hero
Patchwork Heroes
What do all of these games have in common? Yes, that's right, they're all priced 50%-90% less than a AAA title! They're simple! They're fun!
The real question is: Why aren't we seeing *more* of them? There are some gems, to be sure, but the sub-$30 price point is really the same mix of wall-to-wall crap as the $60 price point, there are just more games overall.
Oh, and Dark Void Zero? Easily worth the $60 that Dark Void wasn't.