This is my guess (without doing any research):

The more information you have, the more crisp and clear it is. When they-who-are-them were deciding on the specifications for DVD, they decided 720x480 would be the new standard.

From Wikipedia:

"Although many resolutions and formats are supported, most consumer DVD-Video discs use either 4:3 or anamorphic 16:9 aspect ratio MPEG-2 video, stored at a resolution of 720×480 (NTSC) or 720×576 (PAL) at 29.97 or 25 FPS."

The answer, I believe is... because the companies who decided on the DVD standard negotiated and decided on it (pulled it out of their collective rear-ends).

By the way, the new ATSC standards (via Wikipedia):

"The high definition television standards defined by the ATSC produce wide screen 16:9 images up to 1920×1080 pixels in size — more than six times the display resolution of the earlier standard. However, many different image sizes are also supported, so that up to six standard-definition "virtual channels" can be broadcast on a single 6 MHz TV channel."
Source(s):
http://en.wikipedia.org/wiki/DVD
http://en.wikipedia.org/wiki/ATSC_Standards

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Standard definition TVs have rectangular pixels, not the square ones that HD and computer monitors use. 720x480 on these rectangular pixels stretch to be the same physical size as 640x480 on the square pixels of a computer monitor or HD screen.

From Abobe (source below): "Frame size (mentioned in the previous section) brings up a number of confusing issues. Most confusing is the concept of square and non-square pixels.

Television presents video as horizontal lines. Computers present video as a grid of pixels. Both use a 4 x 3 ratio for standard video playback. The digitized version is referred to as a "square pixel" resolution.

Video is often digitized at what's called a D1 resolution, which means 720 x 480 for NTSC and 720 x 576 for PAL. Within the world of the 4 x 3 standard, these are referred to as "non-square pixel" resolutions—NTSC pixels are wider at a ratio of 1.1:1 or 11/10, while PAL pixels are slightly taller at a ratio of about 0.915:1 or 54/59."
Source(s):
http://dictionary.zdnet.com/definition/rectangular+pixel.html
http://dlamp.com/rex/square.txt
http://www.adobe.com/devnet/flash/articles/encoding_video_03.html

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