This has always bothered me too. For whatever reason I love music from the 20s and 30s. I have one local radio station that plays 20s music constantly and it's great. I will have to check out the web version of XM to see if they have more.
I don't know why the cutoff is the 60s. I guess, like you said, the people who grew up listening to that music are probably gone. However, people who have parents that would've listened to that music and probably played it around their children are still around. You think it could still provide some nostalgia for people.
I assume nostalgia is the primary reason people listen to these decade stations (or just to go back to a time when music was good), but surely there's more to it than just that. I don't think it'd be a costly venture either so I'm really not sure what's holding them back.