On the positive side it seems like a huge improvement if we don't need to store the history of all transactions but rather rely on merkle proofs.
Utreexo makes it possible to use Bitcoin securely without downloading the full blockchain. Since some prominent Bitcoin Core devs think there are not enough full nodes, I speculate that some may not like the prospect of less full nodes (less decentralization), and further more, more code complexity.
Also, Utreexo is still in development.
Also, since it requires no forks, so there is no pressure to integrate it into Bitcoin Core. With so many alternative wallets, a developer really has little incentive to work with the Core community when he could get it merged into a another wallet (his own :P) with certainty.
Take BIP 157/158 as an example. We all know code review is great, but I speculate that many developers would be discouraged from the amount of effort it takes to get something merged. If you have another wallet, as roasbeef does (btcd), I can't blame him for not wanting to bother with bikeshedding a Core PR for months, leaving it up to Jim Posen to see this through.
I speculate that Utreexo only exists because Tadge realized that the only way to get something like this is by doing it in a way that requires no changes to Core. There have been many UTXO-commitment-related proposals, for example Bram Cohen's proposal, which is arguably way simpler, but was too radical a change. Now the man is starting his own coin.
Learn to just appreciate the fact that Core is getting more and more stable!