I think it's smart for them to keep the mobile upload only strategy. It keeps their network free of reposted images instead of live pictures. Or at least it tries to.
It also allows them to offload a lot of the processing to the client, and not have to worry about infrastructure to deal with cropping, resizing, etc.
I concur. I think they are still very much with the core of the initial Instagram concept - click/edit/upload photos easily on the go. The core concept still remains the same.