It's done so if there's a conflict between old custom stuff and the new build, users don't come back to the forums reporting problems because of outdated content. Because Stardock employees have to investigate those claims, find the problems....and find out it's because someone is using old content. That's time wasted on a legacy problem.
It's called "My documents" for a reason - they are MINE.
Half of game .inits are stored in My Documents these days.
It's somewhat annoying since Elemental's big draw is all the customization. I hope they don't make this a standard for every patch. At the very least, on first launch of a new version, it should tell you your custom stuff has been deleted. Making this part of the patch notes would also be a nice move.