IDE 133 can move data far faster than any normal drive can consistantly provide it.
The main difference between SATA and IDE isn't so much the burst speeds (which are only there for a fraction of a second), but the physical connections are neater on SATA, and SATA has been designed with modern technology in mind (IDE was originally made to be cheap, with minimum processing on the drives, and whilst it has evolved it's been held back by the need to work with older devices/controllers).
The drop in the cost of chips and the lack of a requirement for backwards compatibility means that SATA can and does utilise methods to improve the performance where the physical medium of the drive is the bottleneck (things like command cueing lets the drive work out that it's faster to do things in sequence 1,3,2,4 than 1,2,3,4 as it requires less movement of the drive head).
As for why we're still using hard drives, it's pure cost

It costs far too much to provide tens (or hundreds) of gigs of storage, as already mentioned the next lot of drives are due to have (relatively) large amounts of solid state cache on them to improve performance.
Vista also tries to do something similar with it's use of USB sticks as storage.