Balance and price for one. Sure a big block packs more of a punch, but it is very expensive to build. It also adds unnecessary weight over the nose of the car in anything but a drag car. It also takes more fuel just to idle a larger engine than a small one given that each is running at the same level of efficiency. I for one, do not want a big block in my car. I would rather have a smaller engine with higher efficiency to achieve similar results. I build street cars and do not care to have a drag only car since it is impractical. Balance, handling, braking, comfort. Those are the ideals that make a truly good overall car and that is why smaller engines are out there. Ideally, I would build a variable displacement V8 with a EFI system using 16 injectors and twin turbos, with wastegate control via the ECU. That way, the ECU could reference the TPS position and MAP sensor to determine load and add the second bank of injectors, more boost and more cylinders only when load and throttle position demanded. You could also run a smaller displacement engine since you have the ability to add artificial displacement with the turbos. That's what I would build given the financial resources to do so. A 10 second capable daily driver with fuel economy numbers similar to a new Toyota Camry V6.
Hybrid technology also holds some promise for a multi-purpose car if you think about it, but the biggest downfall is the lack of a transmission that can handle the power and the added weight of the Nickel metal hydride batteries. One of the better uses of this technology would be in a drivetrain involving a engine soft on low end torque but high on horsepower. Electric motors produce lots of low RPM torque, so you could theoretically use it to get the car off the line and let the internal combustion engine take over most of the acceleration from the IMA at a given RPM point. Used in tandem with something like a rotary or a Honda B series 4 , in theory it could make for a very linear torque curve at the wheels with the two technologies being used to compliment each other's weak points. You could also use something like a turbine engine driving a generator which would charge batteries that would power electric motors at the wheels via a high amperage speed controller, thus taking advantage of both the turbine engine's willingness to spin at a constant speed and inability to slow rapidly, and the inherent efficiency of an electrical transmission as opposed to a mechanical one. Diesel Locomotives have run on this technology for around 100 years, so it's hardly a new idea.
I would probably run a nailhead in a vintage rod or custom, or even a early Skylark GS ( which came with them), but I just feel that there are much better options in a more modern car. Sure, it's better than a 3.8, then again, so are lots of things. It's bang for the buck that you have to consider also, and the Nailhead does not offer that as performance parts have not been produced in quantity for it in a long time. It has history, sure. From Tommy Ivo's twin nailhead dragster, to the Buick GS you can site plenty of history for this engine, but it has very limited appeal in the modern world as it does not work from a cost/benefit point of view. It's also not viewed as one of the more cool old engines, like a flathead Ford/Merc, early Hemi, Chevy 348/409, Ford 427 Cammer, etc.