It’s not just a hole, you need to reserve the space to house the inserted jack, you need to source or build the housing and build something to convert the signal to digital. That costs money and space for a feature hardly anyone uses. These resources are simply better used elsewhere.
It’s a very small amount of space. When it was first removed the space was still there just empty. There’s phones that do exist that have SD card slots and headphone jacks. The hardware required is very very cheap, especially at scale, so cost is a non-factor. For such minimal resources, who wouldn’t want the option of more features? There’s plenty of features of smartphones that most people don’t use, it doesn’t mean we should remove them to the detriment of the people who do.