Because 320 by 320 is not very good.
Well, depends on your perspective and what you’re doing, so in some respects 320 × 320 is a lot.
Unless you’re building yourself a PicoMite with larger panels, like I’m doing, then not currently. I’ve got 800 x 480 on a 7”, and 480 × 320 on a 4” LCD.
I’ve seen 480 × 480 panels that are physically the right size, but they’re not going to be compatable with the PicoCalc. I believe there are people on the forum looking at alternatives, but there’s nothing definite… and if the PicoCalc is using a unique pinout on the ribbon, it means a custom batch run, and that’s going to take a bit or resources.
The SPI interface PicoCalc now using have no enough bandwith to drive higher resolution（event now to reach 60fps @ 16bit color still need some efforts）
If you are looking for a daily use handheld mordern computer，Just get an uconsole
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And in other respects, such as when you want to emulate an 8-bit computer from 1979, it’s not. 
(In this case, I’m thinking of the NEC PC-8001, which has a 640×200 display.)
It has plenty of bandwidth if you’re willing to use a lower colour depth. The PC-8001 I mention above generates 640×200 with three-bit depth (8 colours) and by my calculations uses less bandwidth than the current screen. And many applications don’t suffer much from reducing the refresh rate to 30 Hz as well, which effectively doubles your bandwidth.
That said, I’ve done a bit of looking about and have never seen a higher-resolution, lower-colour-depth SPI screen. It seems that every higher resolution screen just goes for 16- or 24-bit colour and switches to a higher bandwidth interface to handle that, so a) I think I see why the PicoCalc designers picked the screen that they did, and b) there’s unlikely to be an easily available drop-in replacement that will give higher resolution: you’ll need to do a bunch of (probably fairly serious) hacking to use a different interface, including software hacking to get existing stuff to run.