64bit only is a significant disadvantage for lower memory VPS's. I'm not sure what problem you're trying to solve wrt including a kernel or whatever, but running 32bit gives you substantially more memory for applications.
We've tried to do everything we could to get those old VPS memory problems out of the system. In our experience, most performance problems with VPS systems are due to overselling of resources on the node level, or plans that simply are unrealistic (i.e. 64MB of RAM) not actual client limits. We're ensuring that each server has dedicated resources allotted to it. We don't oversell our systems.
We've tried to offer the best possible price for the resources, so although memory usage is not optimal for smaller systems, we have tried to offset this by offering realistic server resources for a good price.
The 32 bit issue is something we'll definitely revisit; however, there's a technical limitation with pygrub that will only run a 64 bit kernel when loaded from a 64 bit dom0.
There's two different ways we can overcome this: the same way that everyone else does -- by loading a 32 bit kernel & managing that, or by having dedicated 32 bit hardware nodes for our low memory VPSs.
Internally, either option has its own drawbacks & problems.
We went with only 64 bit OSs to:
1) limit the number of choices available to the customer (simplify choices -- make it easier to decide)
2) lower the overhead of managing OS templates.
We've included a kernel in every domU in hopes that most 64 bit issues we've seen with VPSs won't be problematic for our customers.