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There are several reasons for it.
One is size, as mentioned above.
Another is that lots of compact users trading up will have SD cards already (although SD slots are more common on higher end SLRs now, they started on the entry level ones).
There is also the fact that SD is now a faster and more stable format than it used to be and is more cost efficient that CF cards (it's cheaper to make every day SD cards than CF ones).
With the advent of SDHC technology, SD can finally support much capacities. This was a major factor holding SD cards back.
SD cards draw less charge from the camera than CF cards do.
They only use a 9-pin interface (CF uses 50-pin) which, as mentioned above, makes it harder to damage the pins.
SD also has a hardware encryption system (although I've never seen anything at all that uses it) hence the "Secure" digital!
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