Early guns sucked. Too much set up. Long recharge time. Accuracy issues and so on.
With ninja around most people wouldn't even bother. Come to think of it the arms race in the Naruto world seems to have been largely replaced by ninja development.
Though even if you had modern guns things wouldn't change much. It would probably work on genin. Come to think of it, Oro's Sound Ninja (the genin team) were kind of working on that principle. Give ninja an attack at the speed of sound. It's as close as we have seen to a ninja with a gun.
But when you hit the chuunins or just the really good genin the strategy just stops working.
Mind you that's just talking ninja. Civilians wouldn't even get to pull the trigger (unless it's a sneak attack of some type I guess).