The main reason is cost.

The use of a Limited Company is a 2-steps process :
1st - Incorporation of a Limited Company. This is just like give birth to a person.
2nd - Application for Business Registration Certificate for the person.

Use of Unlimited Company involves only the 2nd step.

Moreover, the legal and maintenance work is more complex and costly for Limited Company. The government has to protect the interest of public and business participants while granting limited liability "previlege" to business owner. Therefore, more work has to be done in order to increase the transparency and accountability of a Limited Company (Annual Filing and Auditing etc).

There is no difference in doing business as long as business owner is aware of and willing to take up the unlimited liability. In exchange for the simplicity of maintenance and cost, many people is still using Unlimited Company. Of course, generally speaking, unlimited company delivers the impression of a small business. This is inevitable because no one well structured company will tolerate the risk of unlimited liability.