I think there are 3 things going on, which all contribute to the quiet crowds.
1. Tickets are far more expensive, so less rowdy blue-collar people come to games, and I would almost say that people don't feel right cussing and screaming in such a nice building. The Pit that was MSA was like a dungeon, you wanted to scream, and you wanted to stand due to the hard seats.
2. This city has a problem with rooting for favorites. Across the city, in our own town, we prefer to root for the up-and-comers, the underdogs. This Pacers team went from great to decent to great. There was no progression as there was in the 80s-90s.
3. This city likes good, clean basketball. They appreciate fundamentals. They love the long ball. This team plays a very rough, gritty, ugly brand of basketball, and it doesn't resonate with people of this city. We also love fast paced basketball, which this team doesn't do. There's a reason this city loves Reggie, and it's not all to do with him being here so long and being so good. There's a reason the fans love Austin Croshere, and it isn't because he's white. Pacers fans like good shooting, and a solid, all around game. We also do better when we've got a hated rival, like the knicks, or in the Colts case, the Patriots.
Notice that the city now has a ton of Colts fans? It's because they've stunk so long, and started getting better, and are now very good. They also play a very fun style of game, with a lot of offense. Meanwhile, the Pacers play a very boring style. Not a lot of 3s, not a high percentage on offense, no fast breaks, and not a ton of blocks on the defensive end. It's effective, and it's ugly.
Also, it doesn't help that most of the city is still clinging to the former greatness of a 39 year old man that is a good deal beyond his prime. You'll notice that ever fan still comes out of their seat when Reggie shoots a 3. Same goes for Croshere, to a lesser extent. Yet when JO hits 2 in a row, making dazzling moves on good defenders, he gets some applause, but not riotous cheering.