Why only 320x240 video?

I apologize if this was already dealt with, but could not find it using the search engine. My little Canon pocket camera is able to record very good quality movies at 640x480, and 30 fps. I can watch those movies, with sound, on its 2" screen. I can connect the camera to a tv and watch it almost full screen, also with good quality. I can also import it into iMovie, and then burn a DVD that plays beautifully on the tv. So then, why is the iPod limited to only 320x240? Is it so that movie studios will come aboard, not threatened by the possibility that it can be used to "improperly" move their content to other platforms? If so, then how about an option to allow us to record our own movie content at 640x480, or better......Just my need to rant a little before buying one.

20 G5 iMac (Rev A); Mac OS X (10.3.9)