What do you want? This isn't Nintendo here...
Most likely, they've chosen a smaller display in order to paint the system in its best light. The machine offers a much lower resolution than the competition and is best viewed on a smaller display. In addition, displaying a 480p image in 16:9 simply stretches the horizontal resolution and results in a downgraded picture. Sure, it's widescreen, but it's not as sharp as the 4:3 image would be (as 640x480 is a 4:3 resolution).