Because the role is so tied to Robin Williams (who didn't have his face on the Genie), when Will Smith puts his face on the Genie, it's like further taking ownership of the role, which sets himself up for massive scrutiny. Also in the animated movie, the Genie was very non-human, contorting his face and figure in so many ways that it just makes more sense to not use a human likeness in the live-action adaptation.

Plus it just looks creepy.