steel is real! honestly my favorite bikes have been made of steel. they absorb a lot more of the roughness in the road and don't transmit it into your body as much.
Especially in the sub-$1000 category (which was probably 90+% of the market), the aluminum bike that replaced the steel bike at the same price point was a noticeably worse bike, but it looked way cooler (forget the fact that aluminum bikes improved a lot as time went on). The collapse in demand for bike-appropriate steel tubing meant that any laggard bike makers were essentially forced to switch. So now, if you want a steel bike frame, you really only have the lower-end and the very high-end tubing available to you.
Basically, steel bikes were killed by fashion trends more than anything else. It's no wonder hipsters love them.