Insulin needles these days are very small and hardly noticeable to seasoned diabetics. Dosage is more acurate with a syringe. There was a worry about long term effects on lung function. Marketing departments need to figure out just because something is new doesn't make it better. They also figured there were a bunch of needle phobic diabetics running around. There aren't.
The bigger problem was that in very few situations would exhubera actually replace the needles. A vast majority of Diabetics still had to take shots.
The other two problems were: a., the size of the unit which was truly huge and rather frightening looking; and B., the $900 per week cost of usage.