The list of software synths using and expanding on this algorithm piles up pretty high and is still rising. Perhaps you don't hear the name a lot because most of these plugins don't explicitly say so in their descriptions and marketing (although many do). The more common term is physical modeling, which basically implies Karplus-Strong and more advanced delay lines, waveguides, etc. as underlying algorithms. For example, Applied Acoustics Systems has been researching and publishing this kind of software synth for maybe 20 years. Native Instruments has also made a bunch of stuff clearly using Karplus-Strong, including patches for their popular Reaktor synth. Heck, I've made plugins using this algorithm myself.

I find pure physical modeling has been stagnating though, hybrid approaching with sample-based synthesis seem more promising right now. This is what Sample Modeling has been doing and their results are impressive.