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Moreover, the 5.56mm round is less effective in urban fighting, where you often want to shoot through doors and walls. The 5.56mm round is not as effective at doing this as is the heavier 7.62mm bullet. And the troops have plenty of 7.62mm weapons available, in order to compare. There is the M240 medium machine-gun. While this 7.62mm weapon is usually mounted on vehicles, it is often taken off and used by infantry for street fighting. Lots of 1960s era 7.62mm M14 rifles have also been taken out of storage and distributed. While used mainly as sniper rifles, the snipers do other work on the battlefield as well, and the troops have been able to see that the heavier 7.62mm round does a better job of shooting through cinder block walls, and taking down bad guys with one shot. Too often, enemy troops require several 5.56mm bullets to put them out of action.
In a situation like that, it makes more sense to carry a heavier round. The question is, which one? The army has been experimenting with a 6.8mm round, but now some are demanding that the full size 7.62mm round be brought back. There are M16 type weapons that use the full size 7.62mm round (and the lower powered AK-47 7.62mm round). The new SOCOM SCAR rifle can quickly be adapted to using all of the above by swapping out the barrel and receiver. Could be that the army is going to wait and see what SOCOM decides to do.
The other big complaint about the M16 is it's sensitivity to fine dust, as found in Iraq and, to a lesser extent, Afghanistan. This stuff causes the rifle (and the light machine-gun version, the M249), to jam. Troops have to be cleaning these weapons constantly. Another problem with the M249 is that most of the ones in service are very old, and in need of a replacement (with new M249s, or a new weapon design.) The XM8 solved much of the "dust sensitivity" problem, but part of the problem was the smaller round.
A decision on the army's new assault rifle will probably come sooner, rather than later, because the troops fighting in Iraq and Afghanistan are making a lot of Internet noise over the issue.
The U.S. Army's cancellation of the XM8 (a replacement for the M16) reflects disenchantment with the 5.56mm round, more than anything else. While the 5.56mm bullet was OK when used in an automatic weapon, it is much less useful when you have so many troops who know how to shoot, and can hit targets just as easily with single shots. In addition to better shooting skills, the troops also have much better sights, both for day and night use. It's much more effective to fire less often, if you have troops who can do that and hit what they are shooting at with the first shot. Most American troops can.