People go because it's hotter than Europe, and your money goes much further. Diving in the Red Sea is stunning.
I haven't been to Sharm since 1999, and wouldn't go if only because already by then it was too vulgar-touristy (Italian women in string bikinis strutting down the main roads - not appropriate anywhere in the world imo: swim wear is for the beach or the pool...), too towels-reserving-sunbeds, too much reliance on baksheesh etc without any of the good bits of Egypt to recommend it. That said, if I wanted guaranteed hot weather, five star hotel and great diving, on a budget - it would appeal.
I think people are ridiculous to be put off travelling to all of North Africa because of what happened in Tunisia in the summer, or because there was a horrendous terrorist attack in Luxor in 1997: people don't not travel to London because of 7/7. That said, part of my job is having a detailed understanding of the Arab world, particularly in terms of politics, security and religion, and I do speak Arabic, and I appreciate that some people's only knowledge comes from mass media. We have to make the decisions with the information we have and what we are comfortable with, at the end of the day.
I did, however, have a fantastic summer in Luxor, when I was able to stay at hotels I have always fancied because the failed suicide bombing at the start of the summer, which led to tour operators from the UK pulling out immediately until October (yet in Sharm, Thomson and TC are saying until next Thursday so far? Cynical ploy to grab back money for the low season in Luxor, hmm?). It was totally safe, people could not have been nicer, there was none of the incessant hassle you get on the beach in Sharm or in Khan el Khalili in Cairo, of people trying to get money from you etc etc Staff at the hotels couldn't do enough for you, and you practically had to ambush them to get them to accept tips. Security was second-to-none throughout - better than it was in 1997, in fact, when I took a group of Americans on a tour to Egypt a few months after the massacre...
But again: people have to make the choices they are comfortable with. I can't bear Dubai, because of the rampant materialism and perpetual racism against the guest workers from the sub-Continent: and because it's bloody boring because there's not much culture-wise to see or do. So I wouldn't go there by choice. I like Morocco and Tunisia; I love Lebanon; Syria was great before the war, and Jordan is also a lovely place. But it's horses for courses, and people have the right to choose where to have their holidays and how to spend them, whether that's at Disneyworld, on a beach, or looking at antiquities: wouldn't it be a dull world if we were all the same?
(And fwiw, until the "bomb" - and was it really a bomb? After all, the Islamists claim responsibility for absolutely everything: surely if they'd successfully got a bomb on a plane, they'd have been crowing about it in the usual fashion? After all, they are still saying they shot it down - which they most certainly don't have the capacity to have been able to do: and the pilot requested permission to land urgently because of technical problems... but anyway - Sharm was still green on the FCO maps: meaning that travel was considered to be safe and there were no restrictions. This current incident will not just have an impact on the people of Sinai, but of Egypt in general - the majority of those in industries related to the tourist trade are not from the Sinai peninsular...)