I casually asked someone at a temple and they just smiled and said this is how it is. I almost wanted to ask "what will you offer if Krishna were to visit" but restrained myself.
Simple and main reason is lack of financial support and resources for performing daily rituals and offering naivedyam. If they have the resources and funds, they would offer anything to God.
When Lord Krishna lived, there were lot of cows and dairy products. He lived in a family which owned a lot of cows. So, eating butter or drinking milk is not a difficult task for his mother Yashoda. Whenever he wanted butter, he was provided in no time. Not only his home, whole neighborhood were Yadavas who were cowherds. Krishna along with those friends went to grazing along with those cows and calves.
But now, that is not the case. Many temples do not have a Goshala. For making butter, first we need milk. For milk, we should have a cow with a young calf. Very few big temples have this facility.
Many temples in rural condition and some temples managed by families of archaka (priest) depend on the offerings made by the devotees visiting the temple. Some perform daily rituals with their own expenses. Dhoopam, Deepam and Naivedyam are basic rituals in most of these temples (Offering agarbatti, lighting a lamp in both the sandhyas and offering naivedyam thrice a day). So, they offer what they could. This is the reason many temples offer Sugar crystals (Mishri) as prasad for devotees and give Tulasi water as teertham.
To support worship these temples in poor condition, governments in Telugu states (Andhra Pradesh and Telangana) have started a scheme called Dhoopa Deepa Naivedyam. More than 3000 temples were covered under this scheme where governments grants certain amount of money to priest as honorarium. In addition to these, some temples are managed under governing bodies and endowment board.
There are still many temples which do not fall under government supervision. These temples offer something out of devotion and distribute the same to devotees visiting the temple. This is not specific to Lord Krishna but for many temples presided by different deities. Some small not so big temples offer naivedyam but in a less quantity enough for 50 devotees. If that prasadam is over, priests distribute coconut, sugar etc., as an alternative. This could be another possibility why you were given sugar.
But there are some big temples with good financial support which offer a lot to Lord Krishna. There are temples which are famous for prasadam itself.
Tirupati is famous for its Laddu. But Lord Venkateshwara is offered a lot of dishes besides laddu. See Tirupathi Laddu Prasadam (this is one of my answers on this site which lists various food items offered to Lord Venkateshwara as a part of daily worship at various parts of the day).
Take a look at the list of varieties of prasadam at Parthasarathy temple, Chennai. This includes much more than butter and milk which are believed to be favorite foods of Lord Krishna from childhood.
Puri Jagannath temple has the world's largest kitchen named Rosaghara. In this temple, there are 56 various food items offered to Jagannatha called as Mahaprasad.
If we continue the list, there will be many temples which offer not only butter, but many more based on their convenience. We should also remember that there are temples where there is no such privilege. Hence they give Crystallized sugar or coconut, Jaggery or something else. This list may vary based on region.