I got a huge kick out of walking into a Target electronics section yesterday to see 180gm vinyl records being sold alongside the worst USB turntables ever imagined.
But seriously I have found a use for cassettes - my mother gave me a huge bag of story cassettes that she and my father made for me in the early 1970s. They were a big hit with my 3-year-old son, who demanded more. So I found a Sony dictation recorder and made some more. For children, these are easier to handle than CDs, which tend to get scratched to hell. There was, of course, the one time he yanked an entire tape out (which he regretted and has never repeated). That said, he also woke me up one morning and handed me the door to my Harman Kardon tape deck (fortunately, it was re-attachable).
As to why analog audio is becoming popular? At some level, it may be the sound (at least ostensibly). But a lot of us are tired of the intrusion of computers in every aspect of our lives. Just think of iTunes keeping stats on what you listen to and Spotify broadcasting your preferences to everyone. Records and cassettes - from a processing standpoint, are amazingly efficient. Throw it on, start it up, and a minimum quantum of electronics and control choices delivers what you want. I enjoy kicking back on a Saturday and not always looking into an LCD. That's not to say that iPods have their charms - such as compressing thousands of hours of audio onto something smaller than a cassette tape.
Are cassettes capable? Yes, though the conditions under which they have to be recorded to hit 20-20Khz with 72db of dynamic range are very constrained (starting with using metal tapes). That's part of why good CD players had "peak search" functions in the old days (DATs were the other part). Treble response is highly dependent on the bias fine trim setting of the recording deck (as well as whether the speed of recording and playback were identical). But mutatis mutandis, it is as good as the hearing of any person over 30 - and even when I was in my 20s, I concluded that CDs beat the pants off cassettes.
BIC made some interesting decks in the 1970s that recorded and played at double speed to kill the noise. And Pioneer made an interesting "dynamic expander" (the RG-1) that superproportionately expands output from cassettes and close-groove LPs. It also works great for Airtunes and iPod playback.
Dante