The M16 has been in service for better than 40 years now. Previous US rifles (Krag, Springfield, Garand, and M14) had much shorter service lives. The M16 represents a compromise between the full automatic Tommy gun and the semi automatic Garand rifle. Troops love fully automatic weapons. They figure firing off a full magazine improves their odds of a hit, and makes up for being out numbered or ambushed. The M16 is an improvement on the very popular Tommy gun in that .22 cal M16 ammunition is lighter than .45 cal Tommy gun ammo. Lighter means the troops can carry more of it, which is important when 20 rounds will be gone in one quick burst.
The privates may love full auto weapons but the men responsible for battlefield ammunition resupply don't. These men include everyone from the rank of corporal up to general officer. These guys all figure giving the troops full auto rifles means they will shoot off all their ammo in about 47 seconds leaving their outfit in the the deepest of doo-doo.
Looks like the Army hierarchy has won out on this issue. Unlike the Viet Nam era M16s, the new ones only fire a three round burst when the trigger is held down to conserve ammo. The old M16's would keep firing until the magazine was empty.
In order to get fully automatic fire from the M16, the designers had to reduce the power of the round significantly from that of the old .30 cal Garand rifle. The full power rifle rounds kicked hard. The recoil from such a powerful round throws the full auto weapon off target, sending the second and succeeding shots into the blue. The lower power .22 cal M16 round has very little kick, yielding a rifle that is easily controlled in full auto fire. The round has more power (and less weight) than the old .45 cal Tommy gun round, so in that respect the M16 is a step forward. But the .22 cal round doesn't hit as hard as the .30 cal rifle rounds in use in WWII and Korea. The troops in Iraq have complained of enemies picking themselves up and shooting back after taking an M16 hit.
The M16 trades off a lower power round for full automatic fire. This trade off is generally successful. A few soldiers would be willing to give up fully automatic for a more powerful round, but the bulk of the troops want full auto and will accept the loss of power needed to provide it. The competing AK47 makes the same tradeoff as the M16, a lower power round and full automatic fire.