Also, the A8 is not "much better" than the A7. They're pretty similar actually.
A modest difference in performance: graphics 25-50% faster, CPU pretty much the same.
But, there's a significant improvement in power consumption due to the A8 being repackaged on a 20nm process.
A8 will also be cheaper to produce now due to the reduced die size, so it would make no sense for them to use the older A7 over the A8.