Try reading a record label spinning at 20RPM's, then trying reading the same one at 500RPM's. It's no different for a hard drive. The faster the drive spins the more precise the read heads have to be. As you increase data density, the need for even more precise read heads is introduced. It's not a coincidence that 5400RPM drives are introduced with the highest areal densities.
"<< Is there some type of physical limitations to why they would not make it 7200 RPM? >>
probably number of platters & heat!"
Neither actually, it takes a little bit more engineering to make a 7200RPM drive vs a 5400RPM using the same areal density. That and demand is practically nil for a drive such as that. The Barracuda 180 uses 12 7200RPM platters (only 15GB/platter), so platter count is irrelevant. Heat is a non-issue with 7200RPM drives any more.