P2C, the 320 and 321 engines are not compatible, being different models. The A320 is a -5B4 and the 321 is a -5B3, with different thurst ratings, 27,000lbs and 32,000lbs respectively. Other parts are different too, for example the mean gear has bigger tyres and brakes on the 321, the fuel system is a bit different, the cockpit displays are different, the radar is different, etc etc. Minor but they all add up.
The age of an aeroplane in itself is not the issue, the problem lies in the increased maintenance costs, which increase proportional to age.
The bottom line is that a decision will come down to whether any benefits in flexibility/capacity provided by the A321 are outweighed by cheaper running costs of 320's. The word is that this is indeed the case and so the 321's are going.