640px is the exact width of the iPhone 5's screen.
While you may want larger images, the fact is that Instagram has a large number of users in foreign markets and they're trying to expand their presence there. Increased resolution means larger resource requirements, and ultimately, a slower/reduced experience for the users they're trying to reach.
To be honest, a community like 500px might be more along the lines of what you're looking for.
I'd much rather they allowed you to automatically pad non-square images so that they can be uploaded without cropping. All of my friends on instagram shoot with fancy DSLRs, add padding in photoshop, and then upload the resulting image from their phone. They're a great product already because it's so simple, but if everyone that I want to follow on instagram (great photographers) already take these actions, why not make it easier for them?
It's interesting that they are adding all of these features for improving the appearance of an image but there's still no way to zoom in on an image in the app.
