The 500 lines of code is, to be clear, just a guesstimate. It really is related to how those lines of code are compiled into Ethereum opcodes. Maybe you can get a thousand lines of code. My point is that it's pretty small, compared to what most developers are used to.

The max gas limit is voted on by Ethereum miners. They recently raised it to 6.7 million (I believe it was 4.5 million not so long ago). The gas is what is used to store the contract (thus increasing the block chain size), or to execute code (thus increasing the work load on the miners), so it's up to them.

More Eth = more $$, but they have to weigh that against the downsides. If the price of Eth keeps going up, they have less incentive to increase the gas limit, because they get more money for doing the same work.