Well, why do we keep using paper for books when we know it's flammable? :) Nitrate film, assuming it does not burn everything down, is the superior film stock to acetate. It is more durable and less brittle, and it was cheaper to produce. It also is slower to decompose, assuming once again, that it does not burn down the building, which makes for a remarkable rate of decomposition. Nitrate and acetate film co-existed for a while (acetate for hobbyists or uses when you needed to mail film, because the mailman ain't having your nitrate fire bombs in his bag) because the superior qualities of nitrate kept people using it, despite acetate being known to be less dangerous. Now acetate and polyester compete, despite polyester being objectively the better film stock for most reasons.

If you're interested in the chemistry of film the Aussies have a very nice film handbook! If you're into video tape too check out this.