* It's a lot of work to make them look right.
* They become outdated SO quickly. They're dangerously misleading as often as they're useful.
* Lots of people like to create diagrams, nobody likes to maintain.
Hand drawn dated diagrams have a sort of built in advantage that people will assume that it's not been kept up to date, especially if it's scruffy. Also they're quick.
I like the idea of generated diagrams better than drawn diagrams but unfortunately the software just isn't there yet.
Even when you can do it, they usually look shit because the program won't layout nearly (e.g. E/R) and you can't integrate changes to the source (e.g. tables) to annotations/tweaks.