Why is there a limit of 1000 pictures on my iPhone or iPad

Photo Stream storage doesn't count on you iCloud storage.

Its not designed to used for permanent storage. Just keeps your last 1.000 photos for one month just to give you time to transfer them to a Computer.

You can try Dropbox. It saves photos and videos with no limit in the amount of photos. Only a space limit. 2GB (easily goes to 5GB) for free.

iCloud manages your Photo Stream efficiently so you don’t run out of storage space on your iPhone, iPad, or iPod touch. If you have Photo Stream enabled on your iOS device, every single photo you take appears in a special Photo Stream album that holds your last 1000 photos. You can delete any photos you don’t want from the Photo Stream.1 To touch up a photo or keep a favorite shot permanently, simply save it to your Camera Roll. iCloud stores new photos for 30 days, so you have plenty of time to connect your iOS device to Wi-Fi and make sure you always have your most recent shots handy.

From Apple's site:

"1000 photos on your devices

New photos appear on your iPhone, iPad, or iPod touch in a rolling collection of your last 1000 photos.

All your photos on your Mac or PC

Your computer automatically keeps all the photos that come through your Photo Stream.

Save your best shots

If you take a photo you really love and want to make sure it stays on your iPhone, iPad, or iPod touch, you can save it from your Photo Stream to your Camera Roll."

http://www.apple.com/icloud/features/photo-stream.html

There is no limit of picture, but a limit of space on ipad/iphone.

There is a limit of 100 pictures on Photostream, I would be speculating if I told you that since Apple provides that service for free, they are the once to set the limit.

sorry, meant to type 1000, mistyped.