Yes, people definitely care about the environment, but they are resistant to change. Therefore, the challenge is to create environmentally friendly products that are as similar as possible to what we're already used to, or better than what we currently have (better in terms of comfort, ease of use, cost, and so forth).
We all care about the environment, our environment, upon which we all depend. Everyone loves elephants and tigers and flowers and blue sky and green grass and clean air. No one likes cancer or landfills or plastic islands. But none of us care enough to read up on climate change, or elephants dying, or the cancer that our pesticides on our grass lawns create. Or we don’t have time to cook or garden or bicycle or walk. Or we don’t want to read depressing articles about what’s going wrong.
If the bag was fully compostable, but noisy and we really cared about the environment, we'd deal with it. Obviously too many consumers complained, so Frito-Lay scrapped the bag. That pretty clearly shows people don't care too much about the environment, or that in this instance they're choosing a larger carbon footprint over a smaller one.
No, people do not care about the environment. The Frito-Lay idea is a definitely a good one. People don't care enough to recycle or even know about the environment, probably because we are not educated enough in it. If we knew what our technology was doing to the world, we would not be so eager to continue.