I would assume the reason she originaly lived in Ponyville is because she was an up and coming fashion designer. Trying to sell her outfits in Canterlot would've been too hard for someone with little experience at the time she started.
Now that she has friends in Ponyville, it'd be too hard to travel back and forth. Yes, Canterlot is visible from Ponyville, but I'm guessing that doesn't mean it's a walk down the street, considering they had to take a train in A Canterlot Royal Wedding and Hearthswarming Eve.