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I think that comparing the .357 to the .40 doesn't make much sense. Not the same caliber, so not a very good comparison. The .40 is to the 10mm as the 9mm is to the .357. The bullet is what matters, not the case.
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Interestingly, the case is the main difference between them.
The 40 is just a shortened 10mm case and the 9mm is more or less a 357 also in a shorter case and suitable for autos.
The .357Sig is essentially a 9mm bullet pushed by necked-down 40 case.
Comparing the 357Sig to 40s&w makes perfect sense - its an example of two different bullets being pushed by the same case - one being fast and bigger, the other being even faster but a bit smaller.
The 357Sig has a reputed advantage in initial expansion (expands fully right away) and more reliable feeding due to the bottle neck shape, while the 40s&w has its advantages in price, availability, simplicity, bullet diameter and overall expansion capabilities.
Neither are puny and both generate energy levels and wound channels that are on-par with standard 45acp while fitting into smaller frames and offering better capacity in most pistols.
My short answer as to why the 357Sig isnt more popular boils down to it being more expensive and throwing a smaller bullet - its counter-intuitive, oddly shaped, wasnt picked up by thousands of LEO departments and simply didnt make it onto the ammo manufacturers radar as a big winner like 40s&w did, thus it costs more and is harder to find