MSISDN file on the SIM card (EFmsisdn) is optional and has default access rights allowing you to modify it with just a PIN(CHV1) code (see 3GPP TS 51.011). Therefore, information stored in this file is not very reliable, since everyone knowing the PIN code of the card can change it's content. I do not think it has anything to do with the security reasons...
I do not see anything wrong with using IMEI as a seed for a password generation, the problem is that this number should be encrypted using proper encryption method and not just transformed using MD5 hash function.