It is deliberate as from 1.6 up there is now a update tag for sql:
//executed when component is installed for the first time
<install folder="admin">
<sql>
<file driver="mysql" charset="utf8">sql/example.install.sql</file>
</sql>
</install>
//executed when component is uninstalled
<uninstall folder="admin">
<sql>
<file driver="mysql" charset="utf8">sql/example.uninstall.sql</file>
</sql>
</uninstall>
//executed when the component is installed over an existing version
//or updated through the Joomla Update Manager
<update>
<schemas>
<schemapath type="mysql">sql/updates/mysql</schemapath>
</schemas>
</update>
See the Joomla 1.6 wikipage on the manifest.xml structure here for more information on this