Diesel is popular because diesel cars are more efficient. This is the bottom line - this is what has driven diesel development over the last few decades and this is why they are now so prevelant. You only need to look at markets where fuel cost is not a factor and see how few diesel cars there are to perfectly demonstrate this.
Even people who beleive they choose a diesel because of the power delivery are in reality choosing diesel primarily for cost reasons. It is completely true that a decent turbodiesel offers a specific style of torque-led power delivery that lots of people like. However this style of power delivery is also offered by turbocharged petrol engines, V8 petrol engines and V12 petrol engines. A 760 can waft as well as, if not better, than a 730d. So can a 750i.
But these engines will do this by consuming vast amounts of fuel, making them completely impractical for most people in a country like the UK. The diesel therefore offers a cost effective way of acheiving the level of power delivery they want. The other benefit of a big diesel in a car like that is the increased tank range, but in reality few people do the miles where this will be a massive benefit.
Our car market is now shaping itself such that diesel is becoming the only real option. Nobody offers a large capacity engine in your typical hatch as people wont buy it, so the diesel becomes the best buy. Not because its better than a big petrol but because its the only choice.
Next up is our company car tax, biased towards CO2 output whilst ignoring all the other nasties. Lower Co2 = lower tax. It's that simple. Big V8 = big tax. So you get the 2.0 TDI S-Line not the 4.2 V8 FSI. Which is too expensive for you anyway.
So there we have it. Diesel is becoming a credible alternative but it will always be about cost.
Doubtless there will be many people who will be along soon to argue that I am wrong. To understand why they do this you must understand a little about how the human psychology works. People will tend to convince themselves that what they can afford or the most economically prudent option when it comes to a large purchase is the right one, but they'll do it for reasons other than cost. There is perceived shame in taking the 'money saving' option. These people therefore end up subconciously convincing themselves they choose a diesel for the power delivery not because they couldnt justify the cost of fuelling a V8. The mind is very powerful - the key here is subconcious. They dont make a concious decision to do this so they will never admit they've done it because they don't actually realise.
Sadly time is running out for those of us who like an engine we cant hear when sitting at the traffic lights, who enjoy chasing the redline and who dont like vibrating gearsticks. Dont argue, they all do it.
I'll probably end up buying a diesel at some point. I'd like to think that when I do, I'll be honest about why - saving money.
This whole post covers perception as well as reality. Most people THINK diesel is cheaper, so buy it without bothering to check, because most people put more thought into the kids £200 xmas present than a £15,000 car. This is how the 330i died - same car tax as the 330d, only 6mpg less combined, yet 272bhp of glorious straight six goodness. Pretty much the same fuel economy when you factor in the ever increasing gap between diesel and petrol pump prices. But no, diesel = cheap so nobody cared.