Well, a long time ago I read this article (when it was hosted on an actual webpage) and it matches with my experience of Japanese culture from abroad, and has also influenced how I continue to perceive the culture.
http://www.kinsellaresearch.com/new/Cuties in Japan.pdf
It's completely different from what has been discussed here...I'm assuming by "cute culture" you were not specifically aiming to talk about childlike women? There is so much more to Japan's "cute" culture. Cute stationery, personified appliances, toy-like office desk accessories, etc.
To share what I've learned, first you have to remember how uptight traditional Japanese customs are. Once you became an adult, you were expected to leave home only when you married. Men were expected to get a job and protect the family while women were expected to have babies. The purpose of doing this was to contribute to Japanese society and keep it alive. You needed to put your personal goals away and work, work, work. Japanese people are like any other people, and many found this expectation stifling, so they chose to rebel by refusing to grow up. These expectations still seem to be in place, and it seems to me that having cute things everywhere helps balance people's lives between playfulness and seriousness.
It's kind of like how in the US, sexuality is a forbidden topic that is seen as immoral, so people rebel by sexualizing things. Somebody else made this comparison on the first page of this thread. There are plenty of sexy, mature women in Japan, but the media emphasizes the small cute ones. I don't think this has to do with the same kawaii rebellion; I think they just value that kind of sweet, lovely, delicate femininity. There are women like that everywhere, but they just aren't emphasized. Every society emphasizes a certain type of people and renders others invisible, that's just how society works (sadly).
I went off on a little tangent at the end...
