I grew up in South America -from WWII-refuge parents- where only old and/or fat men wear trunks or shorts. I also been to European beaches were few shorts are worn.
But in America nothing spooks the girls faster than a dude in speedos...they go running away screaming "eeew!" As far as most American men, nothing screams more than I am "gay" that a pair of speedos. Only in competition swimming you will see American men in speedos
So, why the difference? Well Dr. Peky's theory of the "Great Speedo Divide" can be summarized as follows:
"American men do not wear speedos in two accounts: 1) they think the speedo makes their junk look to small, and/or 2) they think the speedo make their asses look very fem, and therefore they are going to become: a) a target for the attention of gay men (Horror), and/or b) the ladies are going to be making fun about their tiny junk (more Horror),"AND
"American women will never allow their men in speedo (except for swimming competition) because: 1) the thought that their boyfriends/husbands looking more sexy that themselves in a bathing suite sends shivers down their spines, and 2) they have been socialize to believe that penises are gross"
So, for both American males and females the origin of this attitude comes from their "puritanical" ancestry, a culture in which sex is associated with shame and guilt. This attitude breed insecurity.. so there you have it
Other theories abound
http://ask.metafilter.com/31942/Why-do-Europeans-wear-Speedos