1. This requires planning and change. Tearing up pathways and streets is expensive, takes planning on administrative side and execution on the physical one. Cities and towns have limited money and don't want go through the effort and cost of it. You'll also encounter NIMBYs who are against any change whatsoever.
2. Tree roots in cities generally grow more horizontal and close to the surface. Reason for this is water and air access. If the surrounding area is paved over with concrete or other solid materials and doesn't allow for drainage and airflow, like some light cobbled pathways would, trees will come up and crack the concrete. Since a lot of the underlying structure is compacted soil to allow stable roads and buildings, water won't drain into it and provide less water for soil.
We wanted to revitalize an open empty market space in our small district. Think 200sqm. Total cost for replacing the old concrete tiles with less compacted cobbles and some wildflower beds and trees was 10m Euros.