I guess in a world where your opponent can instantly swap his body with another object, stop blades with wind and water or reattach his decapitated body with snakes, a sword is pretty much useless. There is also the need to hit the enemy without trapping/exposing yourself in that motion, a sword that is swung or stabbed commits your body and takes a slightly longer time to retract than a smaller blade. So using the kunai would make sense, its a quick hit and withdrawal and easy to hide, whereas a sword can easily get stuck or stopped, then the user would be screwed (i.e Hayate)But I seriously doubt there has been a Naruto viewer (or reader) who didn't hope they would use fricking swords. A man with a sword always overpowers an empty handed man statistically so it would make bloody sense to have one, even if it's just a short one for easy carrying.
I think you gotta be a pretty high level in Naruto to even consider using a sword (i.e Zabuza and mist swordsmen), otherwise it doesn't make sense to issue them to standard ninja.