We were discussing this at dinner the other night, and then someone posed this very pertinent question on a long Chowhound thread . When we were in New York recently, the line at Magnolia bakery was way out the door. I'm no cupcake fanatic, so I didn't try Magnolia. But I can attest that the cupcakes from Clementine, particularly the coconut, are quite wonderful.
Update: I tried Auntie Em's cupcakes today. I had high hopes for the red velvet, but I was a bit skeptical when I dropped it three times on the way into the house and it remained completely intact. The cream cheese frosting was nice, but the cake was indeed overly dense and a bit dry. I prefer Doughboys red velvet, which is lighter and comes in more of a cupcake-on-steroids size. Auntie Em's coconut cupcake was quite nice, slightly moister with a subtly coconutty flavor.
Auntie Em's coconut and red velvet cupcakes
According to the Chowhound posters, here's the reasons cupcakes have become so popular in the last few years:
1) they're a decadent splurge which are nonetheless portion-controlled;
2) Everyone is looking for comfort and joy, which cupcakes seem to provide, but most people don't have time to bake;
3) they tap into the whole inner-child "I'm going to lick off all the frosting first" thing;
4) it's a fad, which like every other, will soon peak and die.