I've lived in Germany for almost 20 years now, and the buffer and chain coupling is still predominant. The German DB began using something similar to knuckle coupings on heavy freight such as ore unit trains in the late seventies.
As far as safety is concerned, most yards are flat and switched by locomotives. I have a DB rules book, and it is absolutely prohibited to stand between the rails while a car is being shunted for coupling. The official practice is for the switcher to push the car/cars up to the car with which it is to be coupled until the buffers are not only touching but are pressed in several inches. Then, a yardworker ducks under the buffers, hooks up the chain, tightens it, hooks up the brake pipe hoses, then ducks back out. This process is really not significantly longer than hooking up the brake pipe in the US.
The buffer and chain coupling provides for smoother passenger operations due to less slack, in particular in push-pull operations. As has already been mentioned, though, most modern passenger equipment uses Scharfenberg couplers, which not only provide a mechanical, but also an electric and pneumatic connection between cars. Most of this equipment has multiple powered axles throughout the train as opposed to a locomotive and cars with unpowered axles.
If I recall this correctly, the heavy freight knuckle couplers also have a built in pneumatic hook-up. I could just as well ask why North American Railroads do not adopt the DB style couplers, as this would save time and be safer than having a guy go in between cars to hook up hoses.