Paper is extremely cost effective. Not only does the construction cost engine manufacturer's pennies, litterally, it does a perfectly fine job of filtering. This is partially the reason why you will never see a cotton guaze or foam as stock equiptment.
Why would a company, like GM for example pay alot more money for a aftermarket filter that generally does the same job. There has been only one occasion, Ford uses K&N filters as OEM equiptment on the Mustang Cobra.
If i was an auto manufacturer i would choose a 15 cent cost paper air filter over a $5 cost of a K&N or Amsoil foam filter per vehicle. They both filter within SAE standards, and the paper cost a fraction of the cost, you know?