As they say, "The center frequency is located at 1/2 the bandwidth of the FM Channel, or 100 kHz (0.1 MHz) up from the lower end of the channel."

It's natural to pick a range between round numbers. so 88.0 MHz - 108.0 MHz doesn't seem so strange a range to be allocated. Now if one band starts at 88.0 MHz and needs 200 kHz of bandwidth, it's going to go from 88.0 MHz to 88.2 MHz. The carrier frequency will be in the middle of this band, so it's represented as 88.1 MHz.

>Well, it is a rather arbitrary reason but a valid explanation.

It's not exactly arbitrary, it was inspired by a player piano, and the original patent used piano rolls. Using all of the keys just makes sense in that context.

The frequency is the center of a 200kHz channel. The first channel is 88.0 - 88.2 MHz, thus the center is 88.1.