Hardware tends toward being general-purpose over time. It only makes sense to do dedicated hardware for things that aren't feasible to do using general-purpose silicon at the time (notable exceptions are for simpler things like ethernet controller chips, although if a general-purpose CPU is cheap enough to replace the chip, maybe that will change). As you pointed out, hardware speeds do get exponentially faster over time, which makes it less desirable to go to the effort of designing purpose-specific hardware.

The problem with current FPGA and CPLD solutions where you would be able to upload your own algorithms is that currently they operate much more slowly than mask manufactured ASICs. Not to say that couldn't change at some point, but even then the line between software and hardware is pretty blurry. Tools for designing correct implementations of an algorithm in hardware that take full advantage of being in hardware (very fine-grained concurrency, etc) are difficult to master.

Sorry, it is hard to hit these points in depth in a short post, but hardware has a set of concerns that are separate from software, and treating them as exactly equivalent is not really accurate, even if functionally and algorithmically they are the same.