East Germany was never made part of the USSR for a variety of reasons, but the most prominent one was that it would act as a buffer state between the west and the Communist Bloc. Had the USSR annexed East Germany, they would have a direct border with West Germany, and by extension, the entire western world; by turning East Germany into a buffer state, Soviet forces would not have to come into direct contact with the west.

This was a strategy employed by the USSR - and by other Communist regimes - throughout the Cold War. In fact, Mongolia asked to become a part of the USSR on multiple occasions, but the USSR turned them down, as they were an effective buffer state against China. It can also be argued that one of the reasons North Korea still exists is because China doesn't want the South Koreans up close.

However, another reason was that it would be hard for the Soviet government to justify an annexation of Germany. Whereas Poland and many other Eastern-European states had historically been under Russian rule, the USSR had no claim to East Germany. An annexation would therefore be considered an extremely aggressive move, bordering on warmongering. This made installing satellite states instead of simply conquering them was a much more effective option.

Another reason would be the costs. East Germany was a very populous and urban area; maintaining it as a part of the USSR would take a heavy toll on the USSR's weakened post-war economy.