[mcswell]

"...all of which will still fall to the ground (ocean) as debris..." After it's been flying in orbit for awhile, where it could in theory hit something else.

As you say, the other part of it--and probably more important--is that if it's turned into orbiting pieces, there's no control over where it lands. Some of it could easily land on the ground rather than the ocean, who knows where. That of course has happened with other satellites and their final stage rockets in the past (notably by the Chinese), but Starship is bigger, and therefore the pieces that hit the ground could be bigger. By launching it sub-orbital for now, and turning off the engines so it lands in the middle of the Indian Ocean, the risks of both orbital debris and unknown ground landing points are avoided.