After Cocoon's outer shell broke in the war of transgretion (Fan'gs ragnarok form broke it as mentioned in the game), the shell actually fell on their village oerba.....thats why the village was lying in ruins. (remember the white snow crystal.....and if you look at cocoon some snowy crystal was pouring down....thats basically the remnants broken shell).
Then the Pulse Fal'Cie got crazy as Vanille & Fang failed so they turned people into l'cie left right & centre.....which is evident by the number of cie'th stone missions we saw....I mean if you read the descriptions one guy got turned into a l'cie to kill a wolf....how stupid.
Because of the fear of being turned into l'cie Pulse Civilization went into chaos & a civil war took place, and eventually they were finished. (This is clearly mentioned in of the analects in the datalog)
Another thing was that the sanctum stole supplies from pulse to help rebuild cocoons shell....so they starved many villages on pulse.
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Most of that is in the datalog & some is minor speculation from ffxiii.net
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