I think everyone is forgetting that Canon APS-C, APS-H and full frame (35mm equivalent) sensors exist today for two reasons.
1) They correspond to existing film formats, making the switch from film to digital easier for those doing so. The logic behind Canon using these formats in digital sensors is clear.
2) The different sensors have different costs involved in production allowing Canon could offer budget minded entry level cameras ranging to the high performance professional cameras. APS-C sensors cost much less to produce than an equivalent MP full frame sensor!
Am I unhappy that the different formats exist? NO! They all offer something the other cannot. I use my 7D just as much as my 5DII! It all depends on what I want to shoot. I still throw my T1i (with my EF-s
60mm 2.8 macro) in my backpack when I want a throw-and-go camera that will consistently take awesome shots even though I have a sweet full frame 5DII to use whenever I need it! Now, I COULD throw my EF 100mm 2.8 macro on my 5DII, but the DOF (and sharpness, and ease of use) on the T1i/60mm is unmatched.
Now, will cameras exist one day that are all full frame? Maybe. Will Canon develop medium format digital sensors? That's very likely. There will be no end to the megapixel race as well as to the size of the sensor. (http://news.yahoo.com/supercameras-could-capture-never-seen-detail-171825569.html
) For now, we have what we have.