Several things to think about:
As you say, it'd cost more - the notional 120 kWh pack would probably add about ten grand to Tesla's cost - so probably fifteen thousand in MSRP.
Right now, we believe Tesla is battery limited - that is, they are selling as many cars as they can get batteries out into packs for. If that is the case, every pair of 120 kWh cars they sell costs them an 85 kWh sale - which means they'd have to raise the profit margin to compensate, and reduce the production guidance as well.
There isn't really a way for them to expand the current footprint of the battery pack for the additional cells. They could possibly put a second pack in the Frunk space, but that means a bunch of duplicated pieces - contactors and writing and BMS at a minimum, and may change the crash safety of the car, which uses that whole area as a crush zone. (The handling would of course be affected, too.)
Even with more space, integrating more battery isn't necessarily simple. The power electronics and motors are all designed around a 400V system - 96 cells in series (which seems to have become the defacto EV standard most folks are using.) The simplest form of addition, stringing more modules into the pack, would result in about 600V, which would likely be hard on the electronics, and I believe is beyond the rated output of the Superchargers.
So you'd have to put the additional capacity in parallel, which means changing the module design and all the plates and automated assembly for that - and most likely means fewer modules in the same space.
Finally, there are the Superchargers. There are a lot of places they currently don't reach, but Tesla expects to change that in the next couple of years, in which case that extra battery capacity will be largely wasted unless you like to drive for six or seven hours without a single stop.
Walter