I guess the first reason that springs to mind is that spec work is of poor quality. Most designers - I can't speak for artists, but I wouldn't be surprised if they shared a similar sentiment - look at products and think about how they could be improved. To see a company not only facilitating poor quality work, but for it to also be pleased with the result is rather... depressing, really.

Another is that encouraging people to work for free is rather questionable. Arguably it's preying on people who might be rather desperate for money when their time would be better invested in other things.

But most of all, is that the term 'designer' now includes people who produce that poor standard of work as well as, for example, the very talented people who work at Apple. It cheapens the term, and I think that's a lot of the reason you see new job titles appearing regularly from within the industry - a "user experience" designer didn't really exist 2 years ago and it basically means "generalist" or "designer".

A lot of clients evaluate design based on aesthetics, which is obviously only half of the solution. It can be very difficult to differentiate yourself from the 'designers' who churn out lots of ill thought through work, especially if you're new in the industry and you don't have lots of client experience to write about.