"the top face of the highest block that can be placed is at Y-coordinate 256." -http://minecraft.gamepedia.com/Altitude

I'm pretty sure what you're thinking about did happen: the height limit used to be 128 and when Notch added some code, it made for a (relatively) big improvement to 256.

I believe they changed it so that the height limit now depends on a single variable in the code, making it easy to build a copy of Minecraft with a different limit. Minecraft as distributed by Mojang still has a 256-block height limit, however.