Actually, the 1970s law resulted in a significant decline in deaths of children from fire, based on statistics collected by the federal government. Clothing fires are probably more common now because there are so many fewer sleepwear fires. Here is a website that gives some reasonable information:
http://injuryprevention.bmj.com/content/4/4/313.full
The law has never required close-fitting sleepwear to be flame retardant. The danger from fire comes from loose-fitting cotton garments (such as nightgowns) because air can fuel fire from both sides of the fabric. A flame touching the hem of a non-treated cotton nightgown will result in the child being engulfed in fire, including face and hair, in about 3 seconds -- much faster than allows an adult to move. The garment basically explodes in flames.
Quilts are not a problem because a burn will progress much more slowly (due to thickness), giving someone time to act.
Children these days are exposed to such a wide variety of chemicals in the environment, I don't think it's wise to expose them unnecessarily to even more chemicals (especially while they are sleeping). My preference is to use close-fitting sleepwear that is not treated with flame-retardant chemicals. For the same reason I would not use a flame-retardant batting in a child's quilt; it's really an unnecessary addition of chemicals in the environment.