Browsing through a blast from my own past, I was reading Steve Wozniak's System Description: The Apple II and in it I found this opening paragraph:
Where did we go so wrong?

Go wrong? *scratches head.
OT I just found an old Apple ][ in my barn- in pretty decent shape (just needs a cleaning). It would be cool to get that thing fired up!

The base iPad is "... small, reliable, convenient to use and inexpensive." (compared to computers back then).
Of course that makes it useless for a lot of things some of us like to do with computers.
The raspberry Pi is, apparently, "... small, reliable, convenient to use and inexpensive." if you know what you're doing.
My home PC is "... reliable, convenient to use and inexpensive." for gaming, virtualisation, consuming media and many other things though only because I find Debian easy to use most of the time.
I could pick up a laptop for ~$500 with Windows 7 preinstalled and that would fit the criteria also.
I'd say we're there and we have choice.

The personal computers of those days were small, reliable, convenient to use and inexpensive compared to minicomputers. Minicomputers were the rack servers of their day.

The personal computers of today are small, reliable, convenient to use and inexpensive compared to rack servers.

I'd say nothing went wrong.

Bah ...

"Sorry you missed all the fun," because it will never come again. "These kids today..."

My laptop is more powerful than the computer that put Apollo 11 on the moon.
And smaller too!

I'd say we live in interesting times.

Well, them people of the Orchard-worshipping persuasion went with the wrong Steve. I know in your use of 'we', you might be thinking of 'you and me' rather than 'them', but that's part of the answer.

And, in a surprisingly technical answer (for a distinctly general question, in 'General'), I think that you could go for 'multitasking'. And GUIs.

Pre-multitasking and pre-GUI, computers could be less capable (less processor, less ram) and still get the job done, because 'the job' was so much less difficult. For a while, 640k was enough for most reasonable single-user requirements, nowadays 640M would be regarded as on the light side. And we are comparing 4 - 8 MHz Z80s and 8086s against 4 GHz Quad core 64 bit monsters.

So, why did we go down this path? Well, to generalise, the idea has been to make things easier for the people at the expense of making them harder for the computers. That trade-off couldn't have been contemplated, at least not to that extent, back in the day because even a VAX 11/750 (1 MIPS!) or a PDP 11/44 wasn't that much faster than a contemporary PC (a few times as fast, not 1000 times as fast). But, these days, we can make that trade-off, so what should we do? It certainly makes my life easier being able to have several programs running and minimise and maximise depending on what is highest on my agenda (that particular millisecond), but maybe having a Raspberry Pi and being more focussed would be better for the karma, I don't know.

It could certainly be better for the 'being able to haul my digital life around with me' aspect, but then a mobile 'phone, potentially, does that, and is way powerful compared top the 'back-in-the-day' PCs. In fact, the big disadvantage of a mobile phone is in the Input and Output area: whatever the other restrictions, I'm not going to be writing anything the length of War and Peace on a touchscreen keyboard. And I'm certainly not going to be taking a printer everywhere, either. But, in principle, a mobile phone is small, reliable(-ish) and certainly can be inexpensive(-ish) compared to computers of the time - while the latest HTC-mega-phone (?) has a noticeable price tag attached, you can buy a phone at the less desirable end of the market quite cheaply (although not a current iPhone, obviously - maybe Woz has an opinion on that). And the phone does a lot of stuff that a computer from back didn't do, obviously - take photos, and even, in extremis, make phone calls, which is nice, potentially.

You can certainly argue that the average Office 'Droid would have had more difficulty adapting to computers, had we not gone down the GUI route. Now, would this have been such a bad thing...

Did we go wrong? I'm not sure that we did.

640K? What luxury!

(I've got my tongue firmly in-cheek in this thread.)

To me, a personal computer should be big, loud, powerful, with mechanical keyboard, big tower, UNIX OS and should produce a lot of heat. I just plug my earplugs and work with pleasure.

P. S. My own PC doesn't quite correspond to this description but it could.

I often think about this. It's true even of my machine