First of all, caching algorithms couldn't deal with 8 megs of cache properly a long time ago, it wouldn't have provided nearly as much performance boost as it has today.
Second of all, the gap between data medium/burst speed rates has been increasing.. thus, necescating more cache. Because as the speed gap increases, the gap between burst rates and internal medium-to-cache data rates increases, the benefit of more cache makes itself prevelent.
And third of all, it costs money. Harddrives, well, you don't make *THAT* much money offa 'em. $4 could make or break your budget