The 127 format acquire a bad image, back in the mists of time - the '50's and early '60's. Prestige - one's image - was far more important in that period of ancient camera history.
There was a flood of cheap 127 cameras at the time. Single aperture, single shutter speed, single element meniscus lens - and single fixed focus (todays "focus free"). I think that the smaller 127 format required less plastic in manufacture.
The camera magazines either propagated or bowed to the idea of the inclusion of exposure information; "This photograph was taken at f/8, 1/50 second." - and quite a few of the unwashed crowd thought: "If I set my camera to f/8 @ 1/50th - I could take the same photograph. Not possible with the single/single/single 127.
The were some - too few - *wonderful* 127 cameras - the Rollei 4x4 was one - I think Yashica made another 4x4 TLR, and I seem to remember one or two rangefinder *gems*.
The massive shift to 35mm, with their prestige - displaced the 127. Certainly, there was nothing wrong with the format itself.