What I meant is that it's ingrained in US culture. Even those of us who are less uptight about sexual content are subject to it, to a certain degree. Gears of War had gratuitous blood and gore, nobody batted an eye. Mass Effect had a sex scene but little violence, Fox News had a cow. Even the ESRB ratings reflect this. A game with gratuitous blood and gore is on the top rack in Wal-Mart with a M rating and would be advertised heavily by Microsoft or Sony as the must-have game of the holiday season. A game with explicit sex scenes, even with zero violence, would be an automatic AO rating and would not even be approved for release by Sony, Nintendo, or Microsoft. It's a cultural thing in this country. We've always glorified war and fighting and been ashamed of sex.
I did see some of the games of that era, like Unreal and Quake. On a technical level, they looked whizzy. On an artistic level, they didn't click with me, but I freely admit to personal bias in that respect. Regardless, they didn't entice me to invest money in upgrading my computer to handle them.
Economics are probably the biggest restraint in gaming these days. I suppose that's always been true, but even back in the late 90s-early 2000s it was still easy enough for even mid-level developers to do well. It's why so many game developers are retreating to the mobile ghetto, because it's dirt-cheap to make games there. Even there, it's tough to make a living unless you create the latest swipe-and-tap IAP-driven fad game.
I looked at Papers Please! after I read your comment. That's the kind of stuff I'm talking about. That game looks interesting. For my part, one game I do want to pick up on Steam other than Legend of Heroes is Tesla Effect, which is the latest Tex Murphy adventure game. Tex creators Chris Jones and Aaron Conner bought the Tex Murphy license back from Take-Two, which was the last owner of Access/Indie Built before they shut it down, got a successful Kickstarter, and a deal with Atlus to publish it through Steam. So that's on my to-buy list. I've also thought about downloading the Leisure Suit Larry remake, just for chuckles.