Vvardenfell is in Morrowind, we went there. Vvardenfell is the volcanic island that dominates the Inner Sea. I think that the island was a good choice for a game that has to confine itself due to technological limitations ("natural" boundaries are preferable to invisible walls, IMO). It might not have been practical at the time to exhibit the province in its entirety.
You also have to consider that TES games
do revolve around a story, and are not merely a sand-box game (but they excel in that too
). The mainland of Morrowind may have been irrelevant to the story we played in TES: Morrowind, with the Nerevarine prophecy kinda focusing on Red Mountain and Dagoth-Ur.
It might be totally possible that we'll see the mainland in a future expansion pack for Skyrim or as a stand-alone game. It might not be called "Morrowind," but they can always call it "
Resdayn"