The problem is that usually you still have to commute to work. Living far away from jobs means a long, unhappy commute. The unhappiness caused by long commutes is well researched - look it up if you like. People compromise and live somewhere in between, which often means the worst of both worlds.
Contrary to what you say, dense cities can be quiet and have isolated private space. Look at the vast single-family-home suburbs of Tokyo. The population density is high even without large buildings, and you can live without a car easily (if desired), but you have your own house with a garden on a quiet, secluded street in a safe neighborhood all within walking distance of the train that can take you downtown. Not particularly cheap or spacious, though. The noisy, crime-riddled, no-privacy-at-all hellish city you describe is common, but it's not the only possibility.
What the sibling comment says is true about social interaction in cities as well. Living in the city people have more friends, more sexual partners, attend more events, and interact more with strangers. For some that is a plus.