My blanket answer is: violence is more popular than creation. It's more accessible too.
Evil Genius was a solid attempt at a DKII-type of game. It's sad that more games like this aren't made. But that's why I keep a close eye on the indie game scene.
As for God games....man, I've wondered this so many times. The tech is there, the systems are there, the potential to make the greatest god game ever is there....and yet everyone misses the mark. B&W came close, but let itself get confused along the way, frequently. Demigod wasn't interested in the SIM aspects at all.
We don't want a game with friendly, cutesy helpers irritating us or spoiling the moment. We don't want to solve 'quests'. We don't want goofy avatars as expressions of ourselves. We don't want to relate to the world in the way our little mortal peons do.
We want to shape the land on a whim. We want to shape the people to reflect us, not their needs. We want to impact reality itself and have the people cry out our name while we do it. We want varied paths of growth and development that reflect our growing power as a god. We want to be able to make the rules, and break the rules since we are the rules.
Well, that's what *I* want anyways. Take the original B&W model, and automate 90% of the city and population management. Strip out the stupid quests. Create an RPG framework for the growth of God powers. Make worship and conversion the dominant game play goal, and give the player DF-like control over fundamental mechanics, like Time, entity properties, terrain and on. Make multiple game modes, one where you are the only god in creation, and one where you play through a campaign to dominate other gods. Give the player intense customization of their God, and have these aspects carry over into the kind of behavior their people exhibit, and the way the world looks and feels.
I have faith someone will get there eventually. Developers can only obsess so long on the perfect city SIM before they start revisiting other genres.
These kinds of games will never be that popular, at least on the scale of FPS and 3rd person anythings. I don't lament the fact Activision and EA and Ubisoft don't green light these kinds of games. I lament the fact that smaller dev houses that don't require that kind of budget aren't doing them either.