Isn't it obvious?
Banning lithium batteries in the cargo hold isn't going to yield much benefit if loads of lithium batteries are being used in the cabin.
A single L-ion battery (or battery pack) is bad to deal with, but can be dealt with, and will likely be noticed before it gets much past the smouldering stage if in the passenger cabin (the airlines have fire extinguishers in the cabin area, and have dealt with such a situation several times in the past).
A couple of dozen, or more likely couple of hundred in the cargo hold can go well past the smouldering stage before the alarm system pick up, and rapidly reach the point where the aircraft's fire suppression system simply cannot cope (IIRC testing has shown that it can be catastrophic despite the halon systems in place on passenger aircraft).
Also the batteries in the passenger cabin are not going to be anything like close enough that a single faulty one can rapidly create a chain reaction triggering others to go off (that is the real worry with them in cargo).
Also lithium batteries actually in devices are typically very well protected by the design of the device from external damage, you can't guarantee that with stuff packed as cargo for shipping where every gram of weight and mm can increase the costs for the company transporting them*.
Remember Boeing recently had to ground it's latest aircraft whilst it redesigned their L-ion battery setups to improve the level of monitoring and protection to each cell, and those were batteries that had been designed and previously certified for aircraft use (so the QC in manufacturing will have been far higher than in almost any other l-ion battery, let alone cheap third party batteries to replace those in your camera/phone etc).
*A kickstarter I'm backing is for a DVD set and the guy running it is talking about the difference in weight for various DVD & Blu-ray cases, as saving a fraction of an ounce on each case can mean the difference between being under a pound in weight and getting one rate in shipping (thus allowing more money to be spent on other things), and paying a lot more in shipping, the same is true for a lot of things, if you can shave off a few grams, and a fraction of a mm in the packaging you can potentially ship another 50 on a pallet for the same price.
A lot of people will often skimp on the packaging to save pennies/time either not realising the risks in doing so with some things, or not caring about it (a few years back an incorrectly labelled and poorly packaged bunch of oxygen generating canisters for an airline caused a crash when they got damaged in transit and caused a fire)
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