The wheellock did see some military service, but not as a general issue service weapon, cost was too prohibitive. Wheel lock pistols were used widely by elite cavalry units for attacks against infantry positions. They would charge by waves and discharge a pair of pistols, and clear away for the next waves, reforming and reloading for a fresh asault. Using these tactics, a well trained cavalry unit could keep up a steady withering fire on a line of pikemen and musketeers.
BTW, I found preferences to some bans on wheellocks. First the Emperor Maximilian I of the Holy Roman Empire/Austrian Empire forbade the making of wheel locks in 1517. He died the next year and it is doubtfull if the ban was ever enforced. Also in 1522 the Italian city of Ferrara forbade any one to carry a crossbow or firearm, especially wheellocks, in the city. Modena, Milan, Florence and other cities enacted similar laws.
I will not state that there were no wheellock guns made in Colonial America, but I've never seen any reference to one. There were wheellocks brought by the Explorers and Settlers, but generally speaking the action was too expensive, too delicate and too tempermental for use on the frontiers.
Wheel lock rifles were indeed made. Not along the Pennsylvania/Kentucky Long Rifle pattern, but there were many wheellock rifles built, including some relatively successful breech-loading rifles. One made for Henry VIII is on display in the Tower Weapons Collection.
Most wheellocks were indeed overly ornate for modern tastes, but in a way it makes sense. Most of these surviving guns were made for members of the nobility. They were built by the premier gunsmiths of the day and were intended to be works of art as much as weapons. Hence the enlays, engraving and plating. I have seen photos of some very practical and workman like wheellocks that I would not hesitate to take to the hunting fields or the shooting range. In fact I have a photo of what was probably the last wheellock made for serious use. It is an elegantly functional dueler built by LePage in 1829.
I believe that the snaphaunce and the flintlock were natural developments from the wheellock, and were inevitable. Had they not come on the scene when they did, I suspect that the matchlock would have been used even longer than it was. After all, the matchlock musket remained a Eurpoean standard infantry weapon almost to 1700, long after the development of the flintlock. The wheellock was simply too expensive the build for the ordinary freeholder, long hunter or frontier settler.
BTW, as an ineresting aside,there was even a wheellock capable of being fired underwater. It was invented by a French watchmaker named Peirre Bergier in the 1620's.