I think one of the biggest problems that the PPU cards from AGEIA had was, that they were quite expensive, but not really adding that much to gaming. Of course a lot of particles floating around in a physical correct way are nice, but it doesn't really improve the gaming experience that much that it would justify the rather high cost of such a card.

I also think that gamers were a little annoyed by yet another extra thing to put into the PC, e.g. when dedicated sound cards disappeared nobody was really sad about that because integrated sound cards can do the same thing for most parts.