The problem with wheel-side dynamos is that they barely work when it's raining (which is often correlated with the moments you actually need light) and they add so much drag (and noise).

Hub dynamos are indeed more expensive (around 50€ as a starting price) but since bikes are the primary means of transportation for many people, I think they usually see this as an acceptable price for the convenience it brings (I know I do).

Also, quite a few bikes here are leased (for around 20€/month, including all maintenance) and those always have a hub dynamo I think.