Party chat changed XBL. When that feature was introduced, the amount of people using mics in-game plummeted. It's a shame. I remember playing Halo 2 when it came out and almost everybody was mic'd up and chatting. Now people just set up a private party chat with their friends.
Most people dont like getting verbally abused and being told that their mom is getting sodomized all day long.
This. And I do think parties changed the game.
I think there was an allure to headsets for a couple years when they became accessible to everyone. However, when all the kids, music-blasters, and downright mean "your mom/girlfriend" rage-quitters saturated lobbies basking in their anonymousness, people just started getting fed up with it.