I don't mind paying close to the full price of the original game for a good expansion and Beth has produced some amazing expansions in the past but this DLC crap has got really old really fast. I don't want to pay for a handful of side quests with a half assed attempt to tie them together as a story I would like to see a whole new dimension to the game with a brand new area that goes off on a tangent from the original game.
Why don't people make expansions anymore? Because they have realised that people are basically very stupid and will pay them a ton of money over time for DLC that takes a week at a time to knock out to the public and lasts a couple of hours if we're lucky. We are our own worst enemies.
The simple answer of why we get smaller DLC then expansions is purely the publisher wants as much revenue from a title as possible nowadays.
IMO only two developers nowadays put out any decent sized expansions and they are Bethesda and Rockstar (on both of Rockstars biggest titles this gen they put out what i'd call proper expansion packs - 2 in fact with GTA4).
While i dont believe Bethesda will do something like horse armour i dont doubt we'll get smaller paid DLC as well as an expansion pack or two.
Disciple
I'd prefer proper expansions that could actually be purchased in a store with paper money, myself. I don't like online transactions.
Sadly i think the days of buying expansions at shops are gonna die out soon - as internet gets faster and HDD's being standard on any gaming platform its just easier for them to push stuff over the net (and i'd guess bigger profit margins for them too).