Why is 1.5 the default pdf version?

At least TexLive creates PDFs by default in version 1.5. Why this particular version?

This question has been asked before in a comment and didn’t receive the attention it deserves. (duh!)

This site alone has multiple questions concerning the problem of includegraphics-ing a PDF of a higher version. From the answers, this rather simple problem magically disappears if one changes the version of the output PDF to the appropriate version … without any side effects.

There are three things about PDF 1.6 which look particularly nice to have:

1. Embed OTF fonts; no converting required anymore
2. AES encryption of PDFs; 1.5 only supports RC4
3. Use the PDF as file container

Number 3 requires a little more explanation. I am thinking along the lines of assignments, collaboration and archiving. With this feature we can have PDFs which carry with them any of the following:

• all source files of used graphics,
• raw data for statistics,
• complete, unabridged and ugly source code files and runnable/parsable scripts
• the solutions to a test as a separate PDF
• the entire workdir of *TeX while creating the PDF
• the actual source PDF, or HTML page if need be, in the bibliography (where applicable)

Yes, I am very intrigued by 3.

With PDF 1.7 we could also store default printer settings with the PDF. This is not that big of a deal, but would smooth out some more ruffles that occur occasionally.

I guess most of the things on my wishlist don’t exist out of the box, but currently I still have to wonder if there is a particular reason to stick to version 1.5, especially as it is as easy as setting a single value to move to a more recent version.
What are the side effects of moving to PDF 1.7? Are there negative side effects?