I've been reading up on the Crusades recently and I noticed that in all honesty the Crusades themselves seem to have had almost no long term effects on the Islamic world. Why then are the crusades seen by many in the West and East as this great turning point in history? It seems to me that events like the Mongol invasion or even virtually unknown events the Ottoman Hapsburg wars were of more importance. Why are the Crusades given such weight? Is this a modern phenomena? My focus as a historian has mostly been the 4th Century so I'm a little out of my depth here.
Why are the Crusades given such weight? Is this a modern phenomena?
The Crusades have always been seen as relatively important in the West with varying degrees of pride, shame, regret, inspiration, anger, etc. It wasn't until relatively recently that they became an important facet of Islamic history.
The Islamic world of the early Crusades was a chaotic mess, and at the time the Crusaders were seen as just another (albeit strange) faction fighting for dominance. The entire episode remained a minor footnote for some time in Islamic histories, and indeed there are surprisingly few Islamic primary sources focusing on the Crusades from that era.
In fact, even the figure of Saladin had been all but forgotten in the Islamic world until the end of the 19th century. Prior to that time, it was the figure of Baybars, a sultan of Egypt from the 13th century, that was remembered as an inspirational figure in the Islamic world.
Strangely, the modern perception of Saladin in the East is based heavily on the romanticized version of him envisioned by western writers and artists such as Walter Scott, for example.
Someone with more knowledge on the subject will have to give you a more complete answer but the short version is that it paved the way to what would become the Italian renaissance.
Because very simply speaking, the Levant (Crusader states), were economically and politically insignificant. Its quite a telling fact that Saladin spent his life seizing control of Egypt, and then fighting wars in the Hedjaz, Syria and Iraq before getting around to conquering the Crusader states.
The much larger war, before the Ayyubid Sultanate, was between the Shi'ite Fatimids and the Sunni Seljuk Turks, with their puppet in Baghdad. The Muslim world was divided by these newcomers, who posed a far larger threat than the Crusaders did overall.
Source: I'm away at the moment (from my books), I don't have the book on me and hence cannot remember the title. Will get around to trying to remember it though.
The Fourth Crusade was very important because of the Sack of Constantinople overthrowing the Eastern Roman Empire, which even after its re-establishment never recovered fully.
Is this a modern phenomena?
As many people have already answered, the Crusades were generally considered a small part of Islamic history. However, in the West the Crusades have always held a great deal of importance, even beyond the Middle Ages.
For example, French royalists during the restoration tied King Charles X to King Louis IX. Louis IX was known for his crusades in Egypt and Tunisa and sainthood. The connection was made not only to shore up popularity for Charles X but also to create an ideal for what the Royalists through France should be like.
Similarly, in early nineteenth century Spain, enemies of Napoleon and his reforms portrayed him as being akin to the Muslim invaders of old, and those who resisted him where just like those who participated in the reconquista.
For more modern examples, Eisenhower told allied troops that they were about to embark on a "great crusade" in his address before the D-Day invasion. President George W. Bush gave a speech a week after 9/11 calling the war on terror a crusade.
Source: Adam Knobler, "Holy Wars, Empires, and the Portability of the Past: The Modern Uses of Medieval Crusades"