Why LXC when there is linux-vserver?

Kernel integration isn't just about addressing a desirable feature, but more about making minimally intrusive changes with little downside in the way of performance, code quality, complexity, and future compatibility. Politics are also involved on both sides, and a good relationship with established developers helps get long term commitment and constructive reviews.

It looks like the LXC project figured it out. That said, I don't know the specifics of why previous projects like OpenVZ and linux-vserver didn't get in. Those projects at least provided some experience, justification, and maybe code that proved useful to the goal of mainline lightweight containers.

LXC is mainstream since 2.6.29 http://virt.kernelnewbies.org/TechComparison