I'm not a fan of package holidays myself, but they do have their place, even now. The best thing about them is that you can book a holiday and then pay it off in instalments, which is really valuable for lower income families.
It also depends on what kind of travelling you want to do. Some people just want to go somewhere and relax at the beach or beside the pool and enjoy an all inclusive package, so they don't have to worry about paying for meals or how much money they will have to spend while away.
And some people just don't want to have to have the hassle of doing everything themselves. The market has changed for tourism and travel meaning there is much less demand for package holidays, but they still have their place.