Despite a higher risk of a fire, pure oxygen also has some advantages.

First, the internal pressure of the vessel is only a fifth of a normal breathing mix, allowing less structural load on the hull of the spacecraft. The resupply system is also simplified, because a system including nitrogen must have an extra tank for the nitrogen. (If you had them mixed, you end up with a higher and higher nitrogen pressure over time). A small mass saving is therefore achieved. For a minimal spacecraft where you simply open the hatch and vent the cabin air when performing an EVA, pure oxygen simply means less air wasted. Nitrogen narcosis seems to not be an issue, as I find it difficult to imagine an accident of increase in the pressure.

As for the decision making process in the early US space programme, the slightly higher complexity of a nitrogen system must have felt a little redundant. The early US Mercury and Gemini also used pure oxygen, but the early Soviet spacecraft, like Vostok, used a normal atmospheric breathing mix. Note that modern EVA suits do still use pure oxygen. ///

At 5 PSI there is not enough atmosphere to support fire, even with 100% oxygen atmosphere.