The main developers are making somewhat easier games (with difficulty settings) because that's the way the market works. If you make every game require the same level of memorization, reflexes, and skill as Battletoads, a large portion of people are going to stop buying your games pretty quickly. They're a business, they have to make money, so no surprise here that they try to cater to the larger demographic.
There are, however, independent developers who are still making difficult games. They don't have to answer to the bottom-line so much. Some of them even do it for fun. If you want a difficult challenge, go looking around for IWBTG and its ilk. Theyr'e not hard to find, and they won't cost you anything, except perhaps the keyboard you broke in half.