Hello,
I do not know for sure but I assume that the IP address space 127.0.0.0/8 was set aside for loopback purposes so that you can create an entire "internetwork" inside your PC. Having just a single address would be quite limiting if you wanted to test scenarios on your PC that required more IP addresses. Having the entire A block 127.0.0.0/8 at your discretion for loopback purposes provides you with a great flexibility in choosing IP addresses according to your needs.
See the RFC 5735 at http://tools.ietf.org/html/rfc5735 for slightly more information about this.
Best regards,
Peter