From what I gathered from the discussions way back, there were two reasons SIMPLE didn't gain traction;
1. If you wished to write something using plain-text and presence and nothing else, it was extremely complicated compared to XMPP
2. SIMPLE was backed by Microsoft, and they had back then (and still do) a reputation for making every protocol they touched - and I do mean EVERYTHING - to a convoluted mess, and then promptly remove support once the complexity made the project implode on itself (aka Embrace, Extend, Extinguish). Therefore being wary of the HTML and office formats, many developers did not wish to become trapped in yet another extinguished protocol...