The "man on the street" of Iran, especially in the urban parts of the country, has always been fairly modern and pro-Western. Iran is also a very  young country. Their baby boom makes the US baby boom look like nothing, and these young kids are just coming of age in a country that's repressive and lacks opportunity. That's not a formula that promotes conservative values. Couple that with their access to the Internet, the decades of quiet subversion that they've practiced- the nation is unstable as it is.

There are basically only two paths open to Iran- reform (which is the route things are taking right now), or a violent, bloody crackdown. There are some powerful people who would prefer the latter, and they have what essentially amounts to a private army that could make that happen. They realize, though, that lighting that match will create an uncontrolled situation, and they don't have enough power to make sure they come out on top.