The answer is simple: spandex.
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Spandex is actually made up of many, long polymer fibers entwined into a ball like spaghetti. When the spandex is stretched, these fibers straighten out and once released return back to their entwined shape. This ability to expand and contract repeatedly, the same way each time, is what makes it so useful in lingerie.
Spandex fibers are strong and can remain elastic in garments for years, but spandex doesn't stand up well to heat or an alkaline environment. And guess what's in your washing machine? Yes, you guessed it; your washing machine is a hot alkaline environment. This environment breaks down the spandex fibers making them shorter until eventually they become useless.
Ideally you should wash your garments by hand, in lukewarm water with a pH neutral detergent like Forever New, because once you've invested in lingerie that makes you feel beautiful and sexy, you want to keep it looking its best for a long time to come.
* Thanks to the Hanky Panky blog for both the image and information on Spandex.