Because the idea is/was that people that buy DVD's are interested in quality and getting as close to the theater experience as they can in their own homes. The black borders are there because the movie is beingpresented as you would see it on the big-screen.
As for going with WideScreen TV, then you have the opposite effect, when you watch tv the picture is being stretched/ cropped orblack borders. You may not notice it, but, it's happening. And, when you watch movies that aren't 16:9 you still have the same issues,so widescreen TV's aren't perfect either but better for letterbox movies-yes.