Question: I was debating with my students this week about which software to submit their files in for my package design class. A few advantages of InDesign I see are as follow:

* The capability of creating mixed swatches with Pantones.
* The ability to customize the links panels so I can see right away which files and in what color mode and resolution, etc.
* Better type management, and in many languages.
* Getting a warning if I have overset text.
* Possibility of lowering the display performance if the file is heavy

After checking opinions on a few forums, it seems Illustrator is the preferred choice for package design. I've also freelanced in an agency specialized in package design and all their stuff was in Illustrator but after discussing, this seems to have been due to habit and the investment it would have required to switch everything to InDesign... 

Am I missing something that makes the industry prefer Illustrator over InDesign? What would be the pros and cons of using Illustrator vs. InDesign for package design?

Answer: 
Some printers require files to be submitted in Illustrator format, so ultimately it will come down to vendor requirements. However, I think of Illustrator and Photoshop as tools to generate layout resources, and InDesign as the best way to efficiently assemble those resources. Illustrator is great for creating the die cut and score template as well as all of the vector-based assets, but it is weak in areas where InDesign excels. Unless your vendor states otherwise, there is no reason not to get the most out of both platforms.
My name is Gil, Designer and a print production guy for the last 25 year
I will sum it like that:
Illustrator is printers choice because you have plugins and apps like ESKO or ORIGAMI or ENGView or IC3D (which works with Indesign as well)that handles the trapping and the proof process of a package.
Illustrator has a cloud of fans because no one has been there before them.

Although there is no built-in preflight, no info about images and no way to find overset text without looking, the industry got used to it and "ESKO" is the Adobe of the Packaging industry.
That said, Indesign produces PDFs just as weel, it plays better in the global market has it can be localised using Cat tools (translators can work with indesign files easily), it has all the preflight you can think of, it has better text tools and can easily generate data based packaging.

Why everyone is using photoshop? Illustrator or Indesign? Adobe is kind of a monopoly, especially in Israel where type is written from right to left - not all companies invest in supporting hebrew or arabic (hebrew is 8-15 million people, while arabic is almost a billion world wide)
There for, for now, ESKO rules, Illustrator rules
but Indesign is smarter, better tool. As a printer, you should get a print ready file. But because not every designer can supply a package ready for real printing, there are bunch of people that work in a package PrintHouse that "fixes" all the client mistakes. If a plugin like "ESKO" or IC3d which does work with Indesign, will grab more market share, I am sure that Indesign will become the main tool for Handling Package variation (not design).
The designers will do what ever they need to do in order to create stunning design and then they will create the full package in Indesign including Localisation or data based design, and tools like IC3d will create samples and mockups and trapping and folding and all the stuff needed not to make mistakes in this packaging industry!