Matthew Bunson in his handy "A Dictionary of the Roman Empire" provides a very reasonable explanation as to why Suetonius' biographies of the first twelve Roman emperors become increasingly prurient and perhaps less accurate after the chapters on Julius Caesar and Augustus. Apparently Suetonius held a high post in Hadrian's administration. In AD 122 the emperor dismissed Suetonius.
Bunson draws on a passage from the "Scriptores Historiae Augustae" (another ancient and debated source):
"He removed from office Septicius Clarus, the prefect of the guard, and Suetonius Tranquillus, the imperial secretary, and many others besides, because without his consent they had been conducting themselves toward his wife, Sabina, in a more informal fashion than the etiquette of the court demanded." S.H.A. Hadr. 11.3
Bunson goes on to say that Suetonius lost access to the state archives where he had been accumulating the data for his book until his dismissal. When he later published The Twelve Caesars it was dedicated to S. Clarus, the other major officer who had been removed by Hadrian.
I think it's possible that Suetonius had a personal grudge against Hadrian and so wanted to make his predecessors seem ludicrous without directly insulting the current emperor. I think it's even more likely that Suetonius had to rely more on imagination than textual sources after he had been fired. And it's certainly no surprise that the remainder of his book is chock full of unflattering stories when he himself may have led a life "in a more informal fashion".