This is probably the only game that makes me wish I had a Wii. I had a blast with Monster Hunter Freedom Unite on the PSP. If you are into it, it's a great game to play with friends.
As for why it never caught on? Well you really need a taste for this sort of game to enjoy it. Here's a few reasons why I think it may not have really caught on in the West as a console series:
-Not much story to speak of outside of a little flavor text setting up each Hunt. "Something is scaring the Popos in the snowy mountains! Find out what it is!" (ps, newbies crap their pants on this mission)
-Awkward, but necessary, control scheme. At first the measured timing of the weapons is very off-putting, and the initially percieved need of a lock-on system can be a deal breaker at first. Of course, if you keep on with it, you would understand why the system is the way it is, and why it's necessary.
-"It doesn't get any grindier than this!" If you want to be serious about the collecting/creation of weapons an armors, you will find yourself grinding out a lot of hunts. At some point in the game, it becomes a necessity for better and specific gear(this is about where casual players give up on the game). (ps. that darn farm is an obsesive time sink, but I loves it!)
-Large variety of monsters is a bit of an illusion. At first glance at a listing of the monsters, you might think there are quite alot. However, many monsters are just "re-skins" of earlier beasties, with a modified rotation of attacks or a new special gimmick. Even among the monsters that could almost be considered truly "different", many are still based on the same template of style and animations. There is a story/background reason for this, but it doesn't help keep up an interesting variety from a gameplay standpoint, especially since you may end up grinding these monsters often.
-Difficulty. A-typical of similar looking third person action games, mindlessly mashing the attack button will not grant you a win. Getting a feel for the timing, and understand the rotation of attacks of a given monster becomes crucial. Patience is a must. While early hunts are pretty tame, the game quickly ramps up the challenge, creating a lot of frustration for newer players.
-Reliance on multiplayer for fun and items. Although I'm sure it's different for others, I thought that this game's single player offerings were quite poor. At a point, it just stopped being fun (fighting Elder Dragons by yourself is balls). While the single player does offer a fair amount of hunts, the majority of content is found within the multiplayer guild hall. Additionally, the creation of many armors and weapons requires items only found on the harder versions of monsters located within these guild hall missions. While it is possible to do these missions on your own, you will often need at least a friend or two to get through the tougher fights. Because there is no established, easy to use, infrastructure for finding and connecting to multiplayer games; it can be a hassle to play the multiplayer portion.
Disclaimer: this post refers mostly to the PSP versions of this series. Concerning multiplayer, I know you can use ad-hoc party to connect with friends through the ps3, but this is only a recent addition (unless you bothered with jumping through hoops to get the older japanese version of adhoc party running).
TL DR:
I think Monster Hunter didn't take off in the West because of its unfamiliar control scheme, high difficulty, necessary grinding, and reliance on multiplayer without a solid structure to support that multiplayer portion.
