That's how the Hard Drive manufacturers calculate bits & bytes. They use the decimal system (10^n) instead of the binary system (2^n). Since Computer are based on the latter system it is only consequential to use the same system on File System/Operating System level as well as in applications.

8 bit = 1 byte
1024 byte = 1 KB
1024 KB = 1 MB
1024 MB = 1 GB

http://en.wikipedia.org/wiki/Byte
http://en.wikipedia.org/wiki/Binary_prefix