I would agree with teamster that if I was to wait for my story to be finished then it would be many years before anyone got the chance to read anything. I am not a professional writer and do not have all day to spend writing. I have only just finished the seventh chapter of my first story and it is 50,000 words. I have plans, rough chapter synopses, for a further 19 chapters and if I write true to form this story will end up being very large.
I find the serialisation of stories is actually my favourite way to read them. I also find the current system to be an effective and easy one to use. The Story Library page lists the details of each story, stating quite clearly if chapters have been added or if it's a new story. I must admit that I don't particularly understand where Xue Lan and others are coming from.
I would also say from my observations the majority of updates each week, and I actually equate 'updates' with possible new chapters for stories I am following, are serial stories. If a new section were to be created for these wouldn't the new story update section become rather bare.
Also as an aside to teamster, I have had quite a good response to my story (maybe 30 different people have emailed me privately) and have even managed to meet some very nice articulate people this way who have shown concern for me and my writing process (and yes badgered me a little when I have been slack in updating - but that simply motivates me more). I seriously need the feedback to know whether I am writing pure drivel or if someone is actually interested in what I am doing. But I do agree that people are a little slack in writing to authors. I have been coming to this site and reading the stories for quite a few years now and it has really only been in the last year that I have begun to write to authors with feedback. I don't know why I was slack for so long, it just seems to be in most people's natures to lurk and enjoy anonymously.