Why did the writers choose this development for Moriarty?

+1 for this very good question.

I will try to answer this question from the storyline of the Sherlock Holmes stories written by Conan Doyle and my first guess would be on the fact that the creators of the show are so faithfully ardent to the original source material written by Doyle. The first reference to Moriarty in the novel comes on one of the 4 long stories of Sherlock Holmes namely The Valley of Fear.

If you look at the time line specified in this website ( I have read all the short and long stories of the author I think this timeline looks approximate if not precisely accurate). and then reference to Moriarty is made again in the Final Problem. As a reader we can assume that they had their intellectual duel in these 2 years. The creators already put a thorough illustration of this duel in the first 2 seasons. if you look at the list there are still plenty of notable adventures which remains after Moriarty's death such as the Empty House, World War stories etc. (An ardent reader might argue that the best of the stories happened only either before or during the Memoirs of Sherlock Holmes, that's a different topic altogether)

THe creators only made 2/4 Long stories (A Study in Pink and Hound of Baskervilles) so far in the series and from Moriarty's death we can safely assume that Valley of Fear won't be adapted which still leaves room for The Sign of Four (A significant story where Watson meets Mary Morstan who becomes his wife) and if you read Moffat's comments here we can safely assume that creators want to focus on other villains created by Doyle.

Either that or the creators are playing coy and bring Moriarty back alive to settle the Final duel once and for all. We never know, but I think Moriarty is gone and from his comments the next Season might start with loose adaptation of The Adventure of the Empty House which is the first of the Return of the Sherlock Holmes series so they stay in tune with Doyle's timeline and to possibly focus on Other Villains in the story.

Firstly, Sherlock was put together series-by-series, following a principle of no delayed gratification - after all, there was never any guarantee of the series being renewed and/or the key actors continuing to be available.

From Den of the Geek:

Nobody seriously expected the show’s writers to go for the obvious Holmesian targets so soon, but Moffat has said that he didn’t see the point of delayed gratification, so the big guns were rolled out after all.

Secondly, in the original Conan Doyle stories, Moriarty dies shortly after being introduced, since his (original) purpose is to perish with Holmes and end the canon.

From Wikipedia:

The character was introduced primarily as a narrative device to enable Conan Doyle to kill Sherlock Holmes, and only featured in two of the Sherlock Holmes stories.

You could therefore argue that the TV serial is being respectful of that tradition.

Have a look at how many different Sherlock Holmes stories there are, there is lots for Sherlock to do other than battle Moriarty.

I think that the producers of the show knew that they had a good villain and wanted to end before it became stale. One of the bravest and best tricks writers can pull off is to end a good thing when it is still a good thing.

If you are old enough and live in the UK contrast Fawlty Towers with Bread. Fawlty has few episodes which are all very funny, Bread started well but eventually got repetitive and - ahem - stale.