The most important factor is that at the time that telephones were invented, there was no such thing as automated call routing. There were people sitting in central switching stations. You told them, "Connect me to Mrs. Johnson", and they replugged the wires -- and here you go, you're now connected to Mrs Johnson. Later, automated call routing was invented, but it did not use tone dialing yet – that would have been too complicated for the simple electronics to handle, because the switching system mainly relied on relays. Instead, it used pulse dialing, which is much simpler. It can even be mechanical (read about rotary selectors).
Consider that the difference between pulse and tone dialing doesn't only exist on the end-user side, or relate solely to the user experience. You must also take into account a variety of other factors:
- actual technology available
- cost of the technology
- existing infrastructure
- availability of trained staff to maintain it.
Back then, telegraphs were in common use. Mostly, these worked mechanically. Later versions were upgraded with electronics, but that's of lesser importance. To achieve automated call routing based on pulse dialing, you could use mechanical (and later, electronic) parts that were similar to those already being used in telegraphy. These made for lower cost, quicker introduction into public service and easier maintenance.
Tone dialing, on the other hand, requires relatively good filters and detectors to match the tone frequencies. It is also more difficult to generate tones than pulses. As the electronics improved and tone dialing started to be feasible, its introduction followed, since tone dialing is generally less prone to noise and errors than merely "counting clicks".
As for the actual user interface, let's take a look at its history.
Prior to transistor-based switching, 95% of the configuration of electrical devices was achieved using:
- switches: stable (press-stays), unstable (press-return), one-of-many (press one, reset others)
- potentiometers (as well as similar devices: variable resistors, variable capacitors, inductors…)
So you had "on/off" devices and "knob" devices: on/off to connect or disconnect power, a 1-2-3-4-5 switch to change the channel, and a "knob" to adjust the volume or tune a circuit. There was no such thing as "press that to start a process which does A, B and then C".
And of course, there were "sliders": knobs and sliders. In other words, all the traditional potentiometers and suchlike.
Currently, we are all familiar with the notion that if you press a certain button, a machine will start, and that if you press that same button 5 times, the machine will perform its action with 5 levels of increasing intensity. So if you want a "louder sound", you press the "+" button X times. That's easy. But doing this requires a complex circuit which counts the presses, plus a DAC that converts the count to a particular voltage or capacitance etc.
Back then, if you wanted to change the intensity of something, you either:
- pressed 1-2-3-4-5-...-X selector buttons (stable selection)
- turned a knob left or right to get "more" or "less"
- slid a slider up or down to produce "more" or "less".
Knobs and sliders adjusted the resistance/capacitance/inductance directly. They were simple mechanical devices.
For pulse dialing, where you need to emit more or less pulses, a rotary or sliding device is the first thing that comes to mind. Let's suppose you need to emit a given number of pulses. So we'll take a tube full of N contacts and a metal ball: if you drop the ball into the tube, it will "connect" exactly N times. Take 10 tubes, each with a different number of contacts, and you can very easily emit 1 - 10 pulses just by dropping a ball through the right tube. It's easy. It's cheap. It works. Maintenance is trivial. There are no complex or expensive circuits. But it's also harder for the end user to use. A rotary device with an automatic spring-loaded return would be so much better, and almost as cheap!
Of course, this account is merely my surmise: I don't know what the exact reasoning was at Bell Labs etc. I have simply made an educated guess based on my own knowledge of the technology.