I was training persian letters yesterday and actually found it more difficult on dotted paper than on lined paper. So maybe the answer is that schools start with lined paper, and then everyone sticks with it? Also I guess school children are the primary buyers of lined paper?

Dotted paper is the absolute best by far, followed by grid squares. Everything else feels like an enormous downgrade to me now that I have got used to having dots.

If one wants quality graph paper, whether bound or loose leaf, I would think one will probably seek out a specialty store, likely online.