Target customer group doesn't know how to use a computer, for the most part.
VGA is not that bad for phone pictures. If you scale down a photo from decent camera to VGA, it can look fine. The problem is that for VGA cameras, the resolution is the smallest issue - colors, sharpness, dybamic range are likely tragic.
It does work very well for this screen resolution.
And what else would you do with this media given it's a feature phone?