I think that for everyone growing up watching Arnies movies through the 80-90s, he always played a larger than life character; Conan, the Terminator, an ex Green Beret in Commando, an elite SpecOps warrior in Predator, a double agent from Mars... he played a character the kicked ass, took names and made it all look easy.
His later roles in Collateral Damage, 6th Day, End of Days, he seemed more of an average joe (or as much as Arnie could be an average joe). His characters were certainly not cowards and came out on top in the end, but they never seemed larger than life like Conan, the Terminator, John Matrix or Dutch.
I also think that he made a decision at some point to portray somebody that uses his brains to fight the bad guys and not his brawn. Maybe as a man with kids he didn't want to rip peoples hearts out of their chest or fling a sawblade through some poor shmuck's skull.
While I don't like Arnie as a politician, I loved (and still love) him as an actor. There are very few people that have the screen presence and charisma that Schwarzenegger has.