Arduino crystal freq. Why 16Mhz instead of 20Mhz?

I think the reason is to allow for backward/forward compatibility with ATmega chips, for example the ATmega 328 is coming out soon (out already maybe?) and that can be dropped into an Arduino since it's compatible.

So in order to keep everything compatible, they left the clock frequency at 16Mhz. That way, all ATmega chips in the same family will work with it.