At this point the servers are expending twice as many resources in maintaining wards than they are in normal world maps. So yes it would be better to move them to instances and reconfigure the DC to allow for more instance space which is something they've done before a couple times; it doesn't even require new hardware.

But Yoshi has gone on record stating he wants the wards to maintain the community aspect of housing which he thinks will disappear with instance housing. Despite all the difficulties this gives them, they're going to keep using the existing system. I think they also fall into the fallacy that they've sunk so much into this system, they can't throw it out now and just keep throwing more resources at it.