It's the law. Under New York law, you can get a citation for riding your bike while listening to music using headphones or earbuds in both ears. It is lawful, however, to listen to music with only one earbud keeping the other ear free.
Sensory deprivation. One of the main ways that people alert each other to danger on the road is through sound. Whether it's honking, yelling or ringing a bicycle bell, you're less likely to hear any of these warnings if you're listening to music putting you at higher risk of an accident.
Decreased attention. The more stimuli you have to contend with, the more difficult it is to dedicate your full attention to one particular task. If you get caught up in a song or story you're listening to while cycling, it can increase your distractibility which could have disastrous consequences.
The majority of cycling-related accidents involve a cyclist and a motor vehicle. Not surprisingly, the injuries a cyclist suffers in such collisions tend to be disproportionately serious and often fatal. Therefore, if you're cycling in traffic, foregoing the headphones can prove to be a life-saving decision.