From TD5Alive webpage:
Why dont we make 'Big Bore' systems? A 3 inch bore system would not be appropriate for modern land rover diesels, since the turbo outlets are only 2 1/4 inches in diameter. Age old (Proven) tuning theory states that the optimal turbo down pipe should be 10% larger in diameter than the turbo outlet casting. This is precisely why land rover chose 2 1/2", as it's a perfect match to the turbo. Using 2 1/2" pipe maintains a rapid flow of exhaust gasses to get them out quickly! Using 3" pipe would reduce the velocity of exhaust gasses, their fore retaining excess heat at the turbo, and exhaust manifold. Another factor is the reduction of back pressure you'd get from a 3" exhaust, as the wide open space of the exhaust takes more gas to fill it, and hence push out the tailpipe. The result could potentially cause turbo over speed, which can seriously decrease the life span of your turbo!