I used to think the same way, but many (most?) countries in Europe end up having coalitions anyway, so you end up really having just two blocks. More parties might give you the option to choose a party that is more after your taste, but in reality you (often) end up with coalitions that take most ideas from the strongest party within the coalition.
I would assume the same thing would happen within the Democratic/Republican Party in the States as well, i.e. a compromise between the left/right wings within these parties based on what is shared by most members(?)