I think this is actually more to do with console controls again. It's not easy to select a line on a screen or scroll through a list with a controller. It is very easy to pick a direction and press a button. However, with this ugly dialog spider taking up a third of the screen you can't put full dialog lines on, that would make it look really ugly (totally unaccepted for console aesthetics). So whaddaya do? Trim all your lines. Ta-da! Now you've created the crappiest dialog interface ever.
If they'd put the hub at the edge of the screen, there would be space for longer paraphrases.
But they put it in the middle. That's form over function.
We can blame consoles for one other thing, though. BioWare's last PC-only game, NWN, didn't support standard definition displays. You had to have at least 800x600, and it worked best at 1024x768. But every game since has been a console game, and thus has supported 640x480. As a result of that support, the dialogue wheel's paraphrases have to be short enough to fit and be legible as a single line of text no more than 300 pixels long.