I don't disagree with your logic at all. It's not my preference to chop those either. But we need to remember, the Eglinton West subway was never finished either...
Yonge extension needs to proceed because beyond Steeles, it's being funded by York Region, so really we're only paying for a 2 station extension. That's a relatively small investment for a pretty big leap forward in transit.
Again, it's not my preference, but when you look at the pecking order in terms of subways in Toronto (not including Spadina and Yonge, as the majority of those lines are outside Toronto), Sheppard is the lowest on the pecking order in the 15 year plan. It's not like STC won't be getting subway service if Sheppard isn't built right away.