Let me list you a few points:
- There are small software companies or mid-sized companies who develop their software in-house who might rather focus on getting many application developers than getting a freelancer DB developer or even permanently hire one.
- In most cases the overhead is a non-issue either due to the amount of data to be processed or due to the low traffic. Besides, when used properly, LINQ to SQL can perform as fast as most SQL queries + the associated .net code.
- Many companies just stick with the Microsoft stack and they can only enjoy the integration. Some other company develops using SOA there's just no problem. The others aren't forced to choose LINQ-to-SQL and if they make that choice is their problem how to integrate it. Nobody ever said LINQ-to-SQL is a silver bullet :)
- I believe security is gained with LINQ-to-SQL because I've bumped across lots of SQL queries taking in unescaped data with string concatenation etc and explaining the whole parametrized query idea has never been easy. Besides since all queries are eventually translated into SQL, unless the tracking issue you describe would happen via a stored procedure, there're again no problems at all.
I also believe your question can be posed more generally to address all ORMs and not just LINQ-to-SQL, and still most of what I said would hold true.