Airmann
With planes, as with cars, it's the larger ones which give the manufacturer the highest profit margins.
As some have pointed out, the A321 is a lot heavier than the A320 and needs to be the size it is to maintain its operating cost per seat advantage. So an A321 shrink is not on the cards.
A 200-seat A320 stretch would seriously threaten the economic position of the A321, a situation I suspect Airbus will do everything to avoid.