there are a few reasons they don't make 3.5's
1: physical size isn't an issue, for the sizes they release that people are willing to pay for it all fits nicely in 2.5
2: 2.5's work in more devices, including in desktops where 3.5's live. if noting is forcing the 3.5 usage then it would be bad for them to artificially handicap them selves.
now for your commend on larger physical drives being cheaper. Flash does not work the way that normal dries to.
Normal platter drives the areal density directly impacts pricing as it drives the platter surface to be smoother, the film to be more evenly distributed, the head to be more sensitive, the accurater to be more precise, all things that cause higher precision that drive up costs as it increases failure rates and manufacturing defects causing product failure.
Now in the flash world. they use the same silicon lithography that they use for making all other chips. there are two costs involved here.
1: the one time sunk cost of the lithography tech (22nm, 19nm, 14nm...) This cost is spread across everything that goes though it. And in reality evens out to no cost increase for the final product because the more you spend the smaller the feature the more end product you can get out per raw product put in.
2: the cost of the raw material in. It does not matter what level of lithography you are using the raw material is nearly exactly the same (some require doping but costs are on par with each other). So in fact your larger lithographic methods become more expensive to produce product once there is newer tech on the market.
No please note that in the CPU world where you have complex logic sets and designs there is an added cost for the newer lithography as it adds to the design costs. but for flash sets there is nearly zero impact form this as it is such a simple circuit design.