Why not decrease the difficulty to increase capacity?
One problem is that lower block times mean an increased chance of forking, which makes head of the chain, and the system, less reliable.

Another problem is that it normally takes a block a few seconds to a minute to propagate across the network. Proportionally that time becomes a lot higher with a decreased block time, giving the original miner and miners with direct connections to them a more significant lead time.

Finally, it throws off the whole schedule of when Bitcoin will be released. New Bitcoins are set to be mined past the year 2100, that would be significantly sped up, changing a lot of existing assumptions about inflation and economic assumptions about scarcity of the currency. Since the change would have to be a hard fork it would be controversial both economically and technically.