I imagine it has something to do with clipping issues. At the end of the day, it would probably have to be done in terms of swapping out models in either the 'drawn' or 'sheathed' states.
In the 'drawn' state, you have the model for the sword, as well as the model for the empty scabbard. in the 'sheathed' state, to avoid clipping issues, you have the model for the weapon within the sheath rather than trying to get the weapon to sit within the sheath without clipping. As far as I know, that's how The Witcher 2 did it, which is why you sometimes got clipping issues when you drew your sword and when you sheathed it.
And like it or not, Bioware has finite resources. including the option of sheathes increases the amount of models they need to make by three fold. Because now you need another model for the empty sheath, and a model for the sheathed weapon. Which means for every single weapon, you need three models.
Let's take the amount of unique weapon models in Dragon Age 2, for example. I estimated about 100 unique weapon models, not including bows. Let's say that we want 'sheaths' of some kind for all weapons. Bows don't need a sheath because you can just sling those over your body by the draw string. But let's say that we want some sort of sling-sheath for staves and then sheaths for daggers and swords.
This means that you would need 300 models for a total of 100 unique weapon models. If you cut out staves needing a sheath, that's still just about 230 models. That's a lot of work for a feature that is nothing besides aesthetic. Sure, it adds to realism and immersion but what is it TRULY adding to the game from a game-design perspective? Not really anything.
It's not a matter of Bioware not being able to do it, it is more likely them choosing to put those resources into something else.
I would like sheaths as well, as realism and immersion is very important to me. But at the same time, I understand that Bioware only has so many resources to work with. And I'd rather have them cut sheaths than something that would have added something important to the story (such as more reactivity within the game world).