2. Being good at "Theory" is over-rewarded, so more people are likely to go the easy route and spend their time writing some thing about panopticons than doing practical research. This also impacts on funding regimes.
3. Freud. Need I say more. That man was disturbed. "ZOMG you want to have sex with your mother" puts a lot of people off the whole thing and is so unnecessary.
4. In some places the obsession with "Theory" means people are desperately trying to incorporate dead French guys into things where they just don't fit; the whole thing is irrelevant and the result is like a cargo cult. It is also like "cargo cult science" in that a lot of old ideas are the unstated assumptions behind any new ideas but no-one questions whether it is necessary to carry all that baggage.
5. In other places, being "fashionable" when it comes to Theory is the last refuge of uncool people. Those who do not know how to dress or socialise in the outside world compensate for it with their 1337 knowledge of Alan Badiou. This leads to really, really shallow academic practices and students who do have a life don't realise what is going on, or that the real reason why our instructor hates "materialism" or "transcendentalism" is for the same kind of reason that our kid brother won't admit to liking Nu Metal.