Put on another hat for a minute...
Lets say WotC decided rightly to "evolve" the D&D line by using open d20 rules. To make a constantly compiled D&D ruleset using the creme-de-la-creme of the OGL market.
It would have failed. Why? D&D is NOT software.
First and foremost, there is no useful method of applying the changes made by improving code. I just downloaded the third edition of Firefox yesterday, but before that I was using 2.0.0.14. That means 14 times I redownloaded Firefox to fix or tweak something on it. If you were a tech-savvy user who used d20srd.org or similar, that would be no big deal to add small changes, but would YOU buy the 14th iteration of the core books because they fixed grapple?
3.5 was the closest WotC ever got to the concept of an "evolving core ruleset" which did borrow heavily from outside d20 sources (Monte Cooks ranger is the baseline for the 3.5 ranger, for example). And I can recall every person who bemoaned buying the 3.5 rule book because "WotC is selling us the same rules again".
Duh. Microsoft sells you the same Word Processor every three years.
For Wizards (who wished to remain a for-profit company) the return on OGL wasn't worth the cost. D&D gained little* in the form of innovation because many people were too busy re-inventing the wheel and making new competing d20 games. Sure Castles & Crusades is a wonderful game, but its materials (from the core books to Castle Zygag) were mostly incompatible with WotC's flagship game. C&C doesn't move PHBs. No more so than Storyteller books sell D&D books. WotC ended up making its own worst enemies (C&C, True d20, Pathfinder) who can better directly compete with D&D than WEG, White-Wolf, or Palladium ever could.
[* There was plenty of people who played nice. I don't want to take away from them. Necromancer Games, S&SS, Goodman Games, Kenzer, Green Ronin before going True d20, and others were very committed to expanding D&D rather than going out on its own.]
So WotC (via GSL) is putting a giant crimp in using its rules to stem the creation of its next level of competition. It sucks, but I can't say I blame them. After the bubble, most d20 products were competition, not enhancement to WotCs carefully constructed and expensively produced ruleset. WotC wants things like Slayer's Guide to Orcs, the Tome of Horrors, or Dungeon Crawl Classics, not Conan d20 or Castles and Crusades. The former doesn't challenge WotCs dominance and it makes people buy PHB2. The latter uses their toys to make new competing entities that doesn't need nor want PHB2.
Welcome to Open Gaming 2008.