Stupid hamsters knocked me out earlier and let Collunsbury beat me to the punch. But screw it - I typed this out already ;).
DSeid: Actually theocracies per se were not noticeably prominent in the immediate pre-colonial era. Really they aren’t enormously common in Islamic history period, after a certain point. It’s perhaps a little difficult to define with Islamic states, since religion did intrude heavily into most governments. But states like the Ottoman Empire really weren’t theocratic, despite the claim of Caliphate. If you were to look at the penetration of the Catholic church into the goverment of Spain in the 16th century, it would look very similar ( at least in terms of influence, if not actual structure ) to the “clerical” penetration into the Ottoman burecracy. The difference being that in the Ottoman Sultanate, the ulema were very rather more under the thumb of the Sultan, than Catholic hiearchy in Spain was under the control of the crown. The differences would become more stark with time, but this was more the withering of political Christianity in the west, rather than increasing theocracy in the east. Alawi Morocco, Qajar Persia, Egypt under Muhammed Ali and his successors - All were ultimately run by secular elites, not religious ones.
Even the early Saudi state was a little equivocal, though it, perhaps Libya under the Sanusiyya, and definitely the Sudan under the Mahdists, were the closest to actual pre-colonial theocracies. Even here you’ll note these were “fringe” states. The Sanusiyya were more a de-centralized religious confederacy, rather than an actual authoritarian regime and they occupied the under-populated and economically and geographically insignificant Libyan desert. The Saudi’s at their most “theocratic” were squashed by the secular ruler Muhammed Ali and their rise to dominance didn’t come until a little later in the WW I and post-WW I milieu, before then they were just one of a half-dozen petty principalities ( none of the rest of which had its stark religious overtones ). The Mahdist state, a true authoritarian theocracy ( as much as it could be in that tribally divided area ), was ultimately a short-lived warlord state.
So theocracy was not the standard model of Muslim rule and really hadn’t been since the Abbasid decline. In fact the ulema, both Sunni and ( variably, there were philosophical debates here ) Imani Shi’ite, often had a tendency towards the apolitical. This could and did change from time to time depending on the state and the its stability - The ulema in some areas were more politicized or powerful than in others ( again in the Ottoman state they were very subordinate to the secular government, who appointed the clerics that held any real authority ). But by and large the trend towards political Islam in the modern sense, is, well, modern 
- The conservative ‘reformist’ movements that arose, mostly in the 19th century ( some a bit earlier ) in the milieu of Islamic decline and the West’s rise. The Sanusiyya, the Wahhabi, even the Mahdists, can be considered part of this tradition.
Meanwhile the political elites and intelligensia in the Islamic world were going down the track of ‘Islamic modernism’. To quote Lapidus: * The essential principle of medrnism was that the defeat of Muslims at the hands of European powers had revealed their vulnerability, and that the restoration of their political power required them to borrow European military techniques, centralize state power, modernize their economies and provide a modern education for their elites. It meant the medieval forms of Islamic civilization had to be repudiated but not that Islam itself was to be denied. Rather Islam was to reconstructed on its own inherent, but neglected, principles of rationality, ethical activism, and patriotism.
The modernist point of view was first espoused by the Young Ottomans in the 1860s and 1870s. While committed to the principles of Islam, they called upon the Ottoman regime to transform itself into a constituitional government and to promote a new social morality and revived culture based on a simplified Turkish language.*
So here we see the “democratizing” ( a term to use carefully, as it wasn’t quite a movement towards actual democracy in the modern sense at this point ) movement from which Ataturk would later emerge and to which we can credit Turkey’s current secular regime. These movements, of various types, increasingly moving in a secular nationalist direction ( either regional or pan-Arab ), began popping up all over. La Ligue de la Patrie Arabe and the Comite Superior National Arabe in 1905, the Hurriyet Club ( in Damascus ) and Syrian Central Committee ( in Paris, precursor of the Ba’ath I believe ) in 1908, the Egyptian Reform and Nationalist Parties in the same year, etc.
There are a number of reasons why these groups ( Turkey aside ) failed, including not only the intrusion of colonialism, but also factors like the politco-economic state of the Muslim world at the time ( a very long and complex topic ), with a minimal educated middle-class in most regions to exert a greater democratizing effect early on, with the situation basically becoming one of an entrenched western-educated elite ruling mostly powerless masses - i.e. what we see today.
