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This is answered in Answers.com's Computer Encyclopedia <parallel-vs-serial>;. Following is my explanation based on this.

Basically, with parallel data paths, transmission speed along those conductors varies due to physical differences in the lines (manufacturing quality and damage are two reasons that spring to my mind). This variation gets more important as transfer rates go up and bit times go down. Coordinating the bit arrival times (when has a byte arrived?) requires additional logic circuitry.

It is much simpler to time the arrival of bits along a single serial path (with near constant delay) than to match up the bits of a parallel byte (arriving at different times), so bits can be transmitted at a faster rate. Eventually, the parallel benefit is offset entirely by the overhead due to synchronization of the parallel bits.

The performance of parallel buses can be improved in several ways, and system board buses take advantage of this. The conductors can be shortened, widened, made more uniform, and protected better. These all increase cost and would make cables larger and less flexible.

For today's transfer rates, it is now quicker and cheaper to design and manufacture faster serial data cables than to design and build the synchronization circuitry needed for parallel transmission. In addition, the synchronization logic increases power consumption, and thus heating.

Another benefit is that the cables are smaller, which restrict air circulation less, reducing possible hot spots in a computer enclosure. Also, smaller cables are generally more flexible.

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