The thinking is that the skin isn't fixed width anymore - so widening it would let people have a couple of images side by side. 800x300 would allow roughly the same amount of content - an image or two and a few lines of text - but severely cut down on scroll time. It also means that, since most images would clash a little side by side, the overall number of images would likely go down helping load times for people.
This, really. The width would never bother me. It's the height that did. Sometimes I'll have to scroll through signatures that are thrice the length of some posts. It just gets annoying after a while. So basically, it's "Oh, this is a nice signature!" then "Wait, this is fucking huge. Why does this person have two 500x500 signatures?" Sure, they look nice, but I just want to read the next post without having to sacrifice ever seeing the signature in the first place by disabling them.