Board Thread:Off Topic/@comment-4659579-20130915082315/@comment-3524435-20130917235248

The real reason? Bethesda would have to make three versions of most armor/clothing. Take the nightingale armor, for example. If Argonian women didn't have breasts, the devs would need to make one model for male characters, one for female characters, and one for female characters with flat chests. This is more important with some outfits, like the tavern clothes (where the breasts themselves are visible) than daedric armor (where they aren't seen.)

And remember that in Morrowind, they didn't have breasts. However, if you equipped a curiass or shirt that looked like there were breasts underneath, it would look the same on Argoinians as it would on anyone else.