artificial 250kB limit?

[Peter Todd]

No, the hard limit has been 1 megabyte forever.

Why there is such limit?

Because if we don't have a limit, your ability to mine isn't a function of how much hashing power you have, the thing that protects us against 51% attackers, it's a function of how much network bandwidth you have, something 51% attackers need none of. Bigger blocks mean more money uselessly spent on network bandwidth, rather than what actually keeps Bitcoin secure.

See my post here, as well as other viewpoints on the issue.