First, there’s the problem of stigma. In the wine industry, many (if not most) educated oenophiles won’t even purchase a wine if they believe it’s been aged with oak chips instead of barrels. Even though blind taste tests have proven that wine drinkers can’t tell the difference, there is still a strong belief that wood chips are the “wrong” way to oak-age wine. While this kind of “old-school” mentality is less prevalent amongst Aleheads than oenophiles, it’s still an issue.Although I'm loathe to disagree with the point that Brother Barley makes in that there isn't a discernible difference between oak chips and a new oak barrel, because I've never been in a position to taste the same wine made using the two different methods. I think the point about it being an old school mentality is a bit of an over-simplification.
The problem is that, in a way, saying you use oak chips is pretty much confessing that your wine is no good in the first place, as would using new oak simply to make up for a lack of character - it's no substitute for making a good wine in the first place. To quote the Oxford Companion to Wine:
Oaky is a tasting term usually applied to wines too heavily influenced by oak flavour, which smell and taste more of wood than fruit, and may be aggressively tannic and dry.*What you can't do with oak chips, which Brother Barley explains in his following paragraph with reference to "used bourbon-barrels or scotch-barrels," is impart character from the 'previous inhabitant' of the barrel, as it were. In the case of wine-making, this previous inhabitant is invariably wine rather than something else. Because new barrels are expensive and their characteristics not always desirable (they can overpower a subtle wine) they are generally used with moderation, and in conjunction with older barrels - complexity of flavour is the key.
Top wineries that do use a lot of new oak allow the wines an extended period of maturation in the barrels, and I'd suggest this process of slow stabilisation and clarification, along with a mild oxygenation, is at least as important as a simple imparting of wood flavour. Almost inevitably, there are relatively new micro-oxygenation techniques that are designed to replicate even this, but they are yet to be widely used.
* 3rd Ed. p.491