My only hope that this will change is with SSDs. I swapped my laptop's SSD for a HDD and now it's a dog, which reminded me how big the difference in performance is.
Your subjective impression of speed probably hasn't changed, but I bet if you dig out your '97 Pentium and fire up Windows 95, you'll be surprised at how it compares to your memories of using it.
Basically, whenever an extra layer that soaked up performance in return for other benefits (such faster development time, better error checking, more flexibility, easier, more intuitive) was actually adopted by real people, it meant that the computer was fast enough in their opinion to trade some of that fastness for other benefits.
relevant: http://xkcd.com/676/
An automatic garbage collector is a separate module: the details are separated from your code; different garbage collectors (with different strategies/tradeoffs) can be used without affecting your code; and development is cheaper.
Programs might have done more stuff, or not depending on what software you're looking at. Browsers on the whole do more stuff, but they also do it fast and efficient.
The evolution of software is much more dynamic and tricky to figure out. They are like corporations. Some corporation accumulate bureaucracy, others remain so-so, and others shed accuracy as a matter of survival.