LCD became the de facto format due to its smaller form factor. At equal sizes, plasma is cheaper than LCD. However, LCD's come as small as 9" diagonally. Plasmas generally bottom out around 32 (really 42) inches. Therefore, a lot of people bought smaller LCD's. I know a lot of people (raises hand) with 37" or smaller LCD's that they bought for less than $1k.
All the FUD about burn-in and image retention didn't help plasma. Moreover, the not at all FUD issue about power consumption is another one.
LCD is still a visually inferior technology to CRT, plasma and (yes, I'm saying it) DLP. It's going to come out on top. Flat panel sexy is in except for enthusiasts with projectors. They're in the minority. I figured plasma would outlast RP DLP. We'll see.
I think you are oversimplifying things. If I compare my LCD with my old CRT, the blacks are better with the CRT. But the picture geometry is better with my LCD (that is, straight lines are very, very straight, even into the corners). And the tint on my LCD TV is as good as I have ever seen on any TV. Using a test disc with a pattern with color bars and the flashing boxes of color, when I look through the special blue filter, the boxes are completely invisible with the default center "zero" setting on the tint control on the TV. It just can't get any better than that.
Each type of TV has its virtues and its vices. There is no such thing as a perfect TV, or one that is the best in every way. It is all a question of which virtues and vices one cares to live with. If black level is your only concern, then LCD (both direct view and rear projection) is probably going to be judged by you to be one of the worst. If off-axis viewing is your only concern, then rear projection is probably going to be judged by you to be one of the worst. And if "burn in" matters most to you, then you will probably judge plasma to be one of the worst (followed by CRT). It really is simply a matter of what vices one can live with, and the idea that there is one best type for all people, given the various faults they all have, is ridiculous.
There are some people for whom each of the various current possibilities is the "best" choice. It depends upon budget, size of TV desired, the room in which it will be viewed (both size and ambient light matter for this), one's viewing habits, and it also depends upon which imperfections bother one the most. For a lot of people, LCD is the right choice, though certainly not for everyone.
If I had an ideal situation with unlimited funds, I would have some sort of front projector. But since I am renting, a permanent installation is out of the question, and what I would want is beyond my budget.