A recent study by University of California-Santa Barbara economist Philip Babcock found that students today work less and have higher expectations in terms of grades.
The Washington Post has more:
Babcock reviewed course evaluations at University of California, San Diego. In those evaluations, taken in mid-course, students described what grade they expected to get. They also told how much time they spent on homework.
Students reported studying half as much for a class in which they expected an A than for a course in which they expected a C.
See a full chart of Babcock's findings here (.pdf).
Some schools are taking measures to prevent students from earning undeserved grades. Detailed in Inside Higher Ed, former Duke professor Stuart Rojstaczer has compiled a list of the colleges standing up to grade inflation. The group includes Princeton University, Auburn University, Florida International University and Reed College.