Well, personal loot is the state of the art standard for random parties. It culls all issues and quarrels with loot distribution at the root.

In premade parties, you'll usually have already set-up the loot distribution in advance and agreed upon by the members, so personal loot can hinder the efficient distribution - If you want to equip your statics monk, it doesn't suffice to just have monk weapon drop, it needs to drop on him. That can be circumvented by allowing limited trading of items, but knowing the devs, there would be "limitations" preventing that.

As for why people are against it: Many people simply want to greed/need on everything and abuse the fact many others aren't as greedy/needy. The current system benefits them, personal loot would reduce their overall loot. It's only natural people are against something that hurts their benefits.