Synthetic biology using existing cells
The J. Craig Venter Institute recently has indeed created a synthetic, self-replicating cell (see the press release). So it's definitely not impossible to create completely synthetic cells for use in synthetic biology, but that doesn't mean it makes much sense to do so. E. coli in particular have been used as bench tools for decades: lots of protocols exist for using them in the lab, their genome has been extensively sequenced and is well studied, and they're cheap. I'm not a bench biologist anymore, but I'm guessing these are the reasons they stripped living bacteria and replaced their DNA rather than trying to build a completely synthetic microbe from scratch.