A loose hanging piece of cloth attached to a moving object is incredibly difficult to animate properly. It was fine in older games where they could get away with it looking like a sheet of cardboard taped to your shoulders but in modern games it would either look terrible or add a lot of complicated animations which would cause lag (especially if a lot of people were wearing them in the same place).
And to be honest I just don't see the appeal. Yes ok it'd be another option for how to dress your character but I don't understand why some people seem to think a sheet of cloth on your back is the greatest invention before sliced bread.