Because USB was designed to be easy to add to PCs
PCs have been locked into 5 volts DC since the very early Intel 8008, because that's what TTL circuitry used, and the industry relied on TTL clear up until the IBM PC. As you know, IBM did not do a clean slate PC design, but made use of off-the-shelf tech, including lots and lots of TTL. So ISA cards were 5V, making it necessary for every PC that supported ISA cards. It's like railroad gauge; you can't change it because you need compatibility.
5V worked nicely for the objectives of USB, which included being able to build low-power devices that self-powered, including scanners, printers and hard drives. A lower voltage like 3.3V would have meant more current.
USB is already everywhere, and it's already the perfect size.
Understand that before smart phones, cell phone chargers carried only power. They were largely 2-pin barrel connectors of varying voltages (sometimes even AC!), with a lot of proprietary stuff out there. Every phone maker used a different charger with incompatible connections.
All of them were driving in the neighborhood of 2-5 watts. As it happens, USB was designed to allow 1-cable connection of many devices able to operate within a power budget: backlit keyboards, floppy drives, and inventive designers even found ways to make hard drives, scanners, printers, and CD drives work on this budget. This spec called out as 500mw for USB 2.0, and 900mw on USB 3.0. This is right in the range a phone is looking for to charge.
Of course, phone manufacturers allowed their own chargers to exceed 500ma.
Need for data connection forced them to USB anyway
Long before smart phones, there were "semi-smart" phones that could do things like take photos, carry address books and sync them to a PC, or have Franklin Planner type life-organizing features for scheduling and task management. All these things needed to sync to a PC. Bluetooth was not ready for prime-time (even today my FitBit can't talk to my computer, my 3yo phone or 2yo Kindle). WiFi is too complex and power hungry. Look at what wired ports were available on all 2005-era PCs/Macs (what? ethernet!?) -- the only choice was USB.
They didn't want to have two separate ports for charging and data sync, and why would they? As discussed, USB is right-sized for charging a phone.
It was a match made in heaven. And like apocryphal Roman chariot wheels defining railroad gauge, it all flowed from TTL.
So USB was already locked in for semi-smart devices. Then of course you had the Blackberry entering the scene. So USB was locked in as the connecting and therefore charging method, long before the iPhone 1 was designed.