Because more sidewall is better for offroading. Most people don't run 37" tires, so 20" wheels are really too much wheel in that they don't leave enough sidewall. For 37s though, 20s would be okay. 18s would be better though, or maybe 17s.
Also, 20" wheels and the tires for them are generally more expensive that smaller wheels and the tires for them (even if the tire is overall the same size).