Are we using a 160 bit hash (which provides for the possibility of a collision) vs a 224/256 bit hash (no possibility of a collision) so that bitcoin addresses can be shorter in length?  If so, is it possible for us to transition to using a 256 bit hash at some later date?

I don't buy the argument that it's TOO computationally expensive to intentionally create a collision.  We have already seen the use of GPUs radically alter the bitcoin mining paradigm.  In the future, we may well see devices designed specifically for the task of performing hashing functions.  Perhaps those devices already exist. 

Why build the opportunity for fraud into bitcoin?  I don't think we need to be concerned about the  number of characters of a bitcoin address when we're copying and pasting them or using QR codes anway.