I think part of it is that FPS games have just got to the point that they are incorporating more important elements of gameplay (size, storyline, unique elements to the genre) that make them huge, and popular.
Not only this, FPS games is *the* American genre. It started a long, long time ago with games like Wolfenestien 3d, Rise of the Triad and of course, Doom. But it then wiggled it's way into other genres such as RPGs with uber-games like Betrayl at Krondor (one of the best FPS RPGs ever made. But it did incorporate isometric combat, but the outside view was entirely FPS), Elder Scrolls series, Might & Magic and such.
So we see so much of it because it's nearly exclusively Western. If you were in Japan, you wouldn't be saturated as much because it's not their game.
Despite that, there are vastly more non-FPS titles out there for any system. Even on the X360, maybe 15% of games are played through a FPS view.
Back from the dead, I'm afraid.
