It's probably helpful to define some terms here:
Elision
This involves the complete omission of individual sounds. It can happen at word boundaries or word internally. An example would be the omission of /d/ in the word friendly, so that it sounds like "frenly":
- He's very friendly --> /hiz 'veri 'frenli/.
Assimilation
This is an altogether different process. This is when two sounds occur next to each other. One of the sounds changes to a different phoneme and becomes more like the sound it's next to. In other words, it assimilates properties of the sound it's juxtaposed with.
So, for example, when we say the word input, the /n/, which is highly unstable, takes on the bilabial quality of the /p/ and becomes /m/. In normal speech therefore the word input is usually pronounced /ɪmpʊt/.
Coalescent assimilation
This is really a quite different phenomenon from normal assimilation. Occasionally, when we have two sounds next two each other the adjustments we need to make to be able pronounce them in succession result in a third completely different sound which replaces both of the original two. One such example of this is when we have /z/ followed by /j/ (the sound represented by the letter 'y'). These are often replaced by the sound, /ʒ/ (the middle consonant in vision). So in the sequence "these yours" we occasionally get:
- Are these yours --> /ə ði:ʒɔ:z/
Here /ʒ/ is acting both as the last consonant in "these" and the first in "yours". Arguably, we also get this word type of coalescence internally in words like "leisure" /'leʒə/.
The Original Poster's example phrases.
The Original Poster's question was about the phrases "what-cha" and "aren't-cha". These are forms of what you and aren't you. In as much as what-cha ever occurs as a form of the phrase "what are you", for example in what are you gonna do about it, it only occurs in sentences where the auxiliary are has been ellipted. In other words the whole word are is completely missing: watcha only occurs as a form of what you gonna to do about it
Both of these phrases are examples of coalescent assimilation, not elision or regular assimilation. This particular type of coalescence is often called yod coalescence. When the sound /t/ occurs before the sound /j/ in normal speech there is a tendency for them to be replaced by the sound /tʃ/ as in chin. In the sequences "what you" and "arent you" we find /t/ and /j/ at the junction of the two words:
- /wɒt ju/ and /a:nt ju/ [British English] --> /wɒtʃu/ and /ɑ:ntʃu/
- /wət ju/ and /ɑrənt ju/ [General American] --> /wətʃu/ and /ɑrəntʃu/
In casual speech the /u/'s at the end there may turn into /ə/, which is the whatcha and arentcha in the OP's question.
One might be tempted to think that the /wətʃu/ in American English comes from a co-articulation of "What are you ..." /wət ər ju/ where the /t/ in 'what' and the /r/ in "are" join together to give a post-alveolar apico affricate - which is very similar in sound to /tʃ/ (see John Lawler's comments under the original question). However, this is definitely not the case. There are two straightforward pieces of evidence. Firstly, this pronunciation occurs in British English in all the same environments as it does in General American, but British English doesn't have an /r/ sound in the word "are" at all. Secondly the "ch" sound in /wətʃu/ doesn't occur in American English in phrases like "what are they ...". If it was the /t/ and the /r/ that were producing the "ch" sound, it would obviously occur here too - but it doesn't.
Yod coalescence in young people's speech
The Original Poster was wondering why young people use yod coalescence, and what this says about their language development. Well, firstly it should be said that the /tʃ/ phoneme is one of the very last to be acquired by children. Children usually manage to master the following significantly earlier than they manage /tʃ/:
- / p, b, t, d, k, g, m, n, ŋ, f, v, s, z, h, w, l, j/
So the occurrence of /tʃ/ is a welcome sign in any young person's phonemic inventory.
More significantly, yod coalescence, although it is often thought of as "not proper" is in fact widespread across all standard varieties of English. It doesn't only occur with "what you" and "aren't you", it commonly at any boundaries where we find /tj/ sequences.
To underline this point, linked at the bottom of this sectio here is a video of Her Majesty Queen Elisabeth II talking about her working life. If you forward to the following stages of the video you will hear the Queen doing various "watchu"-type articulations:
- 05.22 "It's quite an old fashioned idea thatchou do put out the red carpet - for the guest"
- 07.00 "You hope thachour going to get the, the ...
- 07.03 ... the answer thatchou want".
- 09.15 "You know. You know exactly whatchour going to be doing to months hence"
- 09.29 "You have to sort've work out in your mind the hard work, an then whatchou enjoy in retrospect ... "
Video link here: Her Majesty Queen Elisabeth II
The upshot of this is that, young people should not be made to feel bad about yod coalescence, it's perfectly normal, standard English. The idea that yod coalecence is not a feature of standard Englishes is a myth promulgated by ne'er do well prescriptionists. Most people who think that they don't have yod coalescence as a feature of their normal speech, in actual fact, do.