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Because most people like running software they've already paid for -- not replacing it when Jobs announces a new OS ... ;-

Remember when mostly 32-bit Windows 95 came out, but it could run 16-bit apps by pooling them all under one system process, running in a 16-bit compatibility mode? Same with OS X. However, the move to 2K/XP flat-out broke a LOT of older applications. Actually I remember one older application (diabetes monitoring software) that wouldn't install on FAT 32 systems.

Remember when mostly 32-bit Windows 95 came out, but it could run 16-bit apps by pooling them all under one system process, running in a 16-bit compatibility mode? Same with OS X.

Except those apps weren't being run under emulation. The APIs went through a thin "thunking" layer between 16- and 32-bit code.

However, the move to 2K/XP flat-out broke a LOT of older applications. Actually I remember one older application (diabetes monitoring software) that wouldn't install on FAT 32 systems.

Apparently, you've never tried the "Run As..." capability built into XP. It has shims which very accurately model the behavior of the various MS OSes.