BringMeAnother :
Why not upgrade the resolution too?
Considering the relatively low cost and size, I'm guessing there are two key factors:
1- high availability of screens with that somewhat bastardy resolution at that size
2- falling demand for that resolution on laptops due to more people demanding full-HD (if you can have 1080p on 4-7" screen for as little as $200, why settle for any less on a 16" one?)
If you have a large supply or inventory of cheap panels that are becoming more difficult to sell, you need new products to stimulate sales and keep inventory rolling.