Why are Star-Star transformers not used in the transmission of power at high voltages which would reduce the cost of transformer(as lesser insulation needs to be applied across the phases). And for the circulation of zero sequence components we can provide a tertiary winding ?
One reason is that if there is no neutral point and the three phases are left floating that the system can tolerate a single earth fault without tripping out. An earth fault detection unit can indicate the fault to the control room and they can arrange an alternate feed before switching out the faulty line for repair. The downside of this is that the insulation needs to be able to withstand the phase voltage to ground as you state.
Another reason is that if one of the three primary windings fails on a delta-delta, the secondary will still produce full voltage on all three phases. - See more at: http://www.pumpsandsystems.com/topics/pumps/why-wye-why-delta#sthash.Lmlj7S6s.dpuf.
Regarding zero sequence / third harmonic distortion, they all get cancelled out in a delta without the complexity and expense of a tertiary winding.