Well thats a boring answer.
To provoke some debate how about we pretend the real answer is "because it offends Muslims".
Why should we have to bow down to what they want, it's not their country if things like that offend them why don't they stay in their own country? We wouldn't go over to Islamistan and demand that they don't wave their flag or celebrate their religion because it offends us? So why do we have to do that for them? I heard that we weren't allowed to fly the Union Flag in the Queens Jubilee because it's racist apparently, we just have to wave red or rainbow coloured flags as they are supposed to be multicultural and non offensive. What's this country coming to??