I agree with Yahtzee that Extra Lives are the primary reason life systems still exist. They're very convenient as a reward -- they always seem valuable, even if they're so abundant that they aren't really; they're not unique, so you don't have to think of something new for each one; and since life systems are essentially obsolete now, you can give out as many as you want without significantly affecting the game's difficulty.
I think another reason Mario and Sonic in particular keep the Extra Lives is that you need a motivation to collect coins or rings, since 100 of either is an extra life. Of course, rings also serve as a health system, as do coins, in the 3D games. The Galaxy games were actually on to something good, by adding Star Bits (which served as ammunition) as the basic collectible and making the health-restoring coins relatively scarce. In 3D Land, the only way they reward you for anything is extra lives and coins (which, since they don't heal you or anything, are nothing but partial extra lives) -- bouncing on multiple enemies, grabbing the flagpole, having extra time, etc. I guess in that sense, SM3DL is similar to some modern First Person Shooters, in that they lack a good way to reward the player.