Mark Thoma tells us here why he thinks "economists rejected flexible price models." Of course, the models were never "rejected," but New Keynsians have been very successful with central bankers, and in shaping the research program in macroeconomics for the last 10 years or more. This really has nothing to do with empirical evidence. Smets-Wouters and Christiano-Eichenbaum-Evans medium-scale models fit the data, but there are so many bells and whistles and shocks in these models that this seems no more than data description. New Keynesian economics is succesful, because Mike Woodford has been a brilliant salesman. The approach is sold as a synthesis, meant to be inoffensive to the hard-core Prescott RBC people and to old-school Keynesians alike. Nobody's human capital depreciates with the adoption of the New Keynesian synthesis, and policymakers can keep doing what they have been doing, with Mike's seal of approval.
An expansion of these ideas, and a description of the alternative can be found here, in a piece I wrote with Randy Wright for the St. Louis Fed Review, and here, in our forthcoming Handbook of Monetary Economics chapter. Both are a little on the long side, but you can pick and choose.