A LOT of people want to live in such places. However, most of the problems you mention are a result of car dependency and not dense housing itself. Kids have nowhere to play because cars make it unsafe for them to roam. You have no hobbies because you have no places to go to do them. You have no backyard because the roads prevent you from going to the park.
Instead we have to build our houses into huge compounds to do things that we would normally do at community centers, pubs and other public buildings.
