In an interview with Official Xbox Magazine, Xbox global marketing director Albert Penello says that the faceplate failed right from the start for the simple reason that nobody bought one.
This is actually news to me- I knew quite a few people that got several when the console launched. In fact, the branded plates like Gears of War and Halo were in pretty big demand for a while. The only reason that I stopped picking them up was because Microsoft, for all intents and purposes, stopped offering them.
Now, of course, all this is meaningless. The new Xbox 360 s model has no ability to switch out faceplates at all.