Its interesting to look at a time line and what was going on as the 737, 757 and 32X series were developed. Until the mid 1980s, the 727 dominated the short to medium haul fleet of many airlines, especially the large US carriers. Many carriers that purchased 727s in the 1960s simply replaced them with new 727s in the late 1970s and early 1980s.
The 733 was basically a follow-up of the 732, more seats, better range and new features.....the original plan was for the 732 and 733 to remain in production side by side, but to increase sales and to satisfy customer demand, Boeing went on to develop the 734 and 735.....the 734 with more capacity was a type of 72S replacement but it did not sell well in the US and the 735 carried on for the 732. The 734 was more aimed at the MD80 series than anything else.
The 757 was designed and developed to be a 757 replacement, the original 757-100 had about the same passenger capacity of the 72S but this model never went into production. Launch customers EA
convinced Boeing to build the 752 as both wanted the extra seats......early customer DL
agreed and the 752 became the baseline aircraft. However, the 757 ended up being a lot more aircraft than the 72S, with the ability to fly US transcon and even trans-atlantic flights as well as the more typcial 500-1500 mile segments flown by the 72S and carry about 30 more passengers. The 757 sold in huge numbers, but never really replaced the 72S.......there was a hole in Boeing's lineup between the 734 and 757.....Boeing did not have an exact replacement for the 72S.
About then, Airbus was thn developing its single-aisle airliner series and very smartly sized the first model, the A320, at 150 seats, which just happened to be the perfect size as a 72S replacement and the airliner sold well because it was the right size and the right time. Many airlines purchased the A320 as 72S replacements. The later A319 and A321 expanded the market, with the A319 being a sensible replacement for 733/734 aircraft and the A321 adding more seats......although the A321 carries roughly the same number of passengers as the 757, they are very different aircraft with the 757 having more range and capability (nothing against Airbus, that was the intent of the design). The A321 is ideal for high density short to medium haul operations, and can fly many of the routes that a 757 can, but the 757 is designed to do more.
With the later 737NG, Boeing updated the 737 line to fill the gaps in its lineup. While the 736 is the same size as the 732/736, and the 73G is the same size as the 733, the 738 was streched and is larger than the 734 so that the 738 could directly replace the 72S (which it has in many cases, examples are AA
) and better compete with the A320. The so-far unpopular 739 is a simple strech of the 738 to add more seats at the cost of range - look for Boeing to improve the 739 in the near future as it is now Boeing's largest narrow-body.