I know it varies by state, but where I live (MA) the small claims limit is $2000. When you take into consideration the amount of time you're sinking into the case, and the risk that you might not win, there is only a small range of damages that are likely worth pursuing in small claims court. If you're in a line of work where you routinely sign contracts, you probably have clearer-cut cases than the average landlord-tenant situation. I think most people hardly understand most contracts they sign, and doubt they understand the range of options offered by the legal system.
So two things would help: raising the small-claims limit (I think $8k or so would make sense) and educating people about the option. Follow-up question: do shows like People's Court serve or hinder the mission of educating people about small claims court?