The whole point of the webapp is also to be able to save.
Your proposed alternative is very small and convenient for 'just editing', but you would have to transfer the text written to another editing program to be able to save it.
You usually don't want to save a text file as html. You want it as readable text that you can open with any editor, not riddled with <p> like you would end up with if you use a contentEditable.
Beat me to it. :)
and that'll work like a WYSIWYG editor whilw I need just plain text (no formatting).... that's why I'm not using contenteditable div, rather using textarea..