Since they started charging for checking luggage, many more passengers carry on than used to. So of course it won't all fit in the overhead compartments. Usually they will make you hand over larger bags at the end of the jetway but they don't charge for it. I used to check because it was easier than hauling it around especially when I have a connection but now only check when I will be gone a week or more and have to take more stuff.
I agree about these fees. Charge a higher price for the ticket and stop nickel and diming us.