It is the colour of the media that causes this. CD-s were originaly designed to be read with an infra-red laser. DVDs are read with a red laser.
There should be no problems reading a CD with a higher performing laser (i.e. a red one), and there aren't.
However, CD-Rs are slightly different from normal CDs, they contain a coloured dye. Some CDRs use a green dye (which if you think about it, means that it absorbs red light, and doesn't reflect it). If the red laser isn't reflected by the disc, then the disc is unreadable.
CD-RWs reflect equally well at red and infra-red wavelegnths, and can therefore be read quite well with a red laser.
The DVD drive manufacturers were quick to spot this problem, and later generation DVD drives were built with 2 lasers, a red one, and an infra-red one for compatability with CDR.