Why don't more developers use LaTeX?

Agreed - Sphinx is great, especially if you're working in Python. Markdown's perfect for lots of situations too, especially for collaborative document authoring on wikis etc.

I still see lots of developers writing documentation in things like Google Docs, especially business or customer focused documents - places where longer structured documentation is required.

There always seems to be more time than is necessary spent on style and layout when using these tools. Google docs doesn't even support creation of table of contents with page numbers.