If you are judging the ability of finishing word problems in the textbook, I'm assuming for homework assignments, and they really don't understand the actual math I think your problem is probably that most are using a solutions manual or spending what would seem too much time solving the homework problems.
As for solving word problems or practical problems I believe that this is exactly what math should be for especially at the college algebra level. To be serious most students entering college who want or are going to pursue a degree in mathematics are going to start off closer to the calculus level and maybe trigonometry depending on underlying circumstances. What people in college algebra are going for is a degree where math has to be practical and the more diverse applications they see the better. To give a simple example take logarithms: if you were to teach logarithms on the sole basis of algebraic symbols and expressions when it comes time that these students need to apply logarithms to real world problems (like say compound interest) there is going to be a good chance that they didn't really comprehend logs when they were taught them and won't be able to use them properly.
Which brings me to another point for word problems: word problems exist because they make students think and relate math to the real world it is fundamental to learning for many students to apply mathematical concepts in a multitude of ways in order to actual grasp a concept and one of the easiest ways to do this is to place that concept into word problems.