Server-side includes worked fine but weren't enabled by default in any of the mainstream web servers. I think the lack of default-enabled status hampered their adoption. Joe User couldn't just FTP a bunch of ".shtml" files up to their shared web space and expect it to work right.

I certainly used the heck out of them in the late 90s, though.

It would have been very cool if HTML had been created with the ability to do client-side includes without having to resort to using a Turing-complete VM in the client to do it.