In the usual category of metric spaces, morphisms are short maps (aka metric maps); that is, a morphism $f$ from $X$ to $Y$ is a map satisfying $d_X(x,y)\leq d_Y(f(x),f(y))$ for all $x,y\in X$. This choice surprises me. Surely choosing morphisms to be Lipshitz maps (functions satisfying $d_X(x,y)\leq Bd_Y(f(x),f(y))$ for all $x,y\in X$ and fixed constant $B$) would give a more useful category since the short map condition seems so restrictive?
I am aware that short maps as morphisms is natural if one views metric spaces themselves as enriched categories (Lawvere metric spaces) and is interested in functors between Lawvere metric spaces. I am much more interested in knowing whether short maps perhaps ensure the category of metric spaces has better properties then Lipschitz maps? If so, how specifically?
One reason to care is that the usual category of metric spaces and short maps (provided you allow two points to have infinite distance from one another) is very well behaved -- it's complete, cocomplete, and symmetric monoidal closed. See, for instance the introduction to Rosicky and Tholen's Approximate Injectivity. It's possible that the category of metric spaces with lipschitz maps doesn't enjoy these nice properties, and that's why people don't consider it as often. If we restrict attention to compact metric spaces with lipschitz maps, then we definitely don't enjoy these properties, since they're not closed under colimits (basically because of compactness) or limits (this I think would continue to be an issue even for the category of all metric spaces with lipschitz maps). See this related question for more details.
Another reason is that the category of metric spaces with lipschitz maps "doesn't remember the metric" in the sense that two metric spaces with different metrics can still be isomorphic in this category (compare with two homeomorphic spaces equipped with different metrics). In this sense, the category "isn't actually seeing the metric structure", it's only seeing that part of the metric structure that we can detect via lipschitz functions (in much the same way that topological spaces only see the part of a metric we can detect via continuous functions)! This is closely related to @N.Virgo's comments about universal properties being only defined up to scaling. Of course, it's easy to see that the category of metric spaces and short maps doesn't have this issue -- it correctly "remembers" the metric structure in the sense that two isomorphic objects must have exactly the same metric.
Obviously this isn't a historically accurate picture, and I would love for someone with more experience with various categories of metric spaces to chime in!
I hope this helps ^_^