I blame it on the increased repair cost. People don't want to spend 10k each time they wipe.
Even before 1.7 a lot of people (myself included) had started pugging less and less. The issue for me is that I get used to the high quality performance from my guildies and like going into a fight where everyone has spent time watching the strategy vid and are all minimaxed up the wazoo. You get used to everyone being able to do HM TFB half asleep and then you expect non-progression content to be a speedrun. If your guild 12 manned HM Xenoanalyst II with no wipes, you'd be pretty annoyed after 3 wipes with a pug group on SM story wouldn't you?