I don't think the retro/indie community is that large, in fact it represents a minority. The most successful indie games all use polished graphics, not pixels; take a look at Mount&Blade, for example.
Most retro developers go for pixels because of ease and familiarity, I guess, while most players nowadays - including myself - would prefer the polished graphics were we given a choice. Then again that depends on the quality of game itself.
Most developers and would-be-developers I meet aren't exactly skilled with graphics, they can barely draw a stick figure, let alone a cute and smooth sprite with rich animations. Good artists always are in short supply.
Why retro? Perhaps because the games back had high gameplay value. Games nowadays are 90% graphics and bloat and 10% gameplay, and the last number keeps shrinking.