Why not 4x6? Because 4x5 is a standard print size. However, you may make
your own custom layout with 4x6s if you so desire.
Your 3.5x5 image happened because Elements won't guess and crop the image
for you. It will adjust the image to the maximum size that will fit
entirely within the template rectangle. That will leave white space if the
proportions of the image don't match the proportions of the image template.
If you want an exact match, you'll need to crop the image to the template
proportions before printing.