Expanding a Vendor Hall is always an iffy proposition. While I'm sure there are many talented people who don't get space each year, letting in everyone who applies and is pony-related is not necessarily a good idea. You tend to flood the room with too many people carrying the same type of merchandise, which can both lower the quality of the room and dilutes sales since there's only so much money to spread around the room. For some vendors that's not so much of an issue, but for others it can make or break your convention.
For example: I sell primarily the IDW MLP comic, so I have practically zero competition if someone is looking to buy the comics. But if I'm selling prints, there's a whole bunch of other people who do that as well... and even though I'd be the only person selling prints done in my artistic style, I'd still have to worry about the fact that there could potentially be a hundred people competing with me if BronyCon let in every person who applied for space. And while that may seem like it would be a great thing for the consumer (more choices!) it's a terrifying proposition for a vendor who has to worry about covering expenses and making a profit.