A few (about 15/year in the UK is a figure I've seen quoted, for 2001) are still carried out, though it's a less drastic prefrontal leucotomy. It was horribly misused in the past but it's not inherently unethical any more than any other treatment, though the fact that the consequences are permanent means that it's inappropriate for any but the most severe illness. It can only be used with the patient's consent and if recommended by two independent psychiatrists, a higher hurdle than for any other treatment.
Cinematic portrayals of psychiatric treatment can be very engaging but can depict treatments very emotively - electroconvulsive therapy for example can be extremely effective for severe depression, but people are put off by its negative portrayal (which do in turn reflect misuse in the past). It's ECT in One Flew Over the Cuckoo's Nest IIRC, not psychosurgery.