Because POD is so easy and it doesn't require a lot of cash up front (anyone can go to Lulu and print a few books), it becomes synonymous to "lack of quality." With traditional houses, you have the highest quality control. Then you have the self-publishers who use offset printing. Does it mean their books are better? Not really, but there's a preception that since they are willing to risk it all and dump $thousands in the production and promotion of the books, they must be at least serious about it. We are willing to think that they've gone through the whole due process with book design, editing (perhaps even using a professional editor since they can pay for it), layout, etc. The person who can do self-publishing tends to be smarter and more determined and, well, financially more capable.
With POD, the idea is that anyone who can open up a word processor can do it. It doesn't matter if it's Stephen King or grandma Gertrude at a nursing home who's doing it. And when it's so easy, there are literally tens of thousand of these POD books out there without any types of quality control.
Do we really want to be in that company?
For an aspiring author, POD may be great because it requires little upfront investment. But for a consumer, POD is a big risk. They'll be dumping $20 on a paperback and chances are the book might be real crap (Atlanta Nights, anyone?)
So if you think as a reader instead of a writer, you may start to realize why POD can be problem.