Perhaps because it is distracting and overwhelms other useful uses of a social space? A characteristic it shares with other compelling areas of deep human interest such as politics and religion.
To expand on this: in IRC, most social channels get overrun with two things really quickly if there aren't rules against them: sex (including public roleplay), and talk of increasingly addictive illegal drugs. Unfortunately, that means that people who are interested in discussing things other than sex and drugs are made to feel uncomfortable, and end up leaving.
IRC's solution is that each IRC network is pretty much a world full of communities, so it's not hard to find a sex/drug-related community to talk in, and one can participate in both communities at the same time.
The problem with translating that to "virtual world" type spaces is that generally, since one has an a single avatar that can only be in one place in the world at once, one can't interact with multiple communities at once.
Thus, some significant amount of people spend significant amounts of time in the sex and drug communities, and the other communities end up being overshadowed, and eventually leave the world. Niche communities can never develop in the first place, as they'll never reach the critical mass of people in the same place at the same time.
