Because there are more bells and whistles on cars now. Midsize sedans have GPS tracking and seat warmers and rear window defoggers and air bags and anti-lock brakes and leather seats and padded dashboards and five speed automatic transmissions and get 28 mpg and go for 100,000 miles without a tune up and all the rest.
That stuff costs money. People love to look back with fond memories at old cars (or anything else for that matter,) but those old cars were pieces of crap (and unsafe!) compared to the cars we have on the road now. All in all, we're a lot better off now than before.
While it's true that some people can't afford all of this stuff, there are other options--Ford Focus, Chevy Cavalier, Honda Civic, take your pick. As far as midsize goes, Kia and Hyundai make nice midsize cars for a comparatively inexpensive price.
But as I pointed out, adjusted for inflation, a Kia costs pretty much what a VW Beetle cost in 1964. Car prices have been constant adjusted for inflation. Real income has not.
Would you buy one of those if it was 5 years or more old? Would you buy one if it had over 100,000 miles on it? You can still see some of those old cars from the 60's and 70's still on the road --- lots around here but those imports don't look good after just a few years.