My first question to a prospective student was "who are some of your favorite bands?". With enough blank stares I changed it to "what is some of your favorite music" with equal stares.
Kids (and adults) want to play guitar, but the initial excitement and rush comes and goes fast as they have no real guitar music to get into anymore.
Pop music has changed, and that's fine. It gets hard to find a memorable or "cool" guitar part in pop music. The last one I can think of is "Party in the USA", and that, of course, is subjective (and quite old now).