Because they aren't trying to colonize, they want to change the Earth (for themselves)
It's not like overpopulation was the Observer's problem, the problem was that they had broken the planet:
By the year 2609, the Observers had ruined the planet. To rectify this, a plan was put into place that involved going back in time and taking the planet from modern-day humans.
From the episode Letters of Transit:
WALTER: (remembering The Purge) They weren't all bad, you know. One of them even tried to help us. He was called September. What happened to him was... well, unexpected. He told me that, in the year 2609 A.D., they finally ruined the planet. (turns of the holographic device he was studying) They poisoned it -- the air, the water. And when it was fundamentally uninhabitable, then they traveled back through time, and took our planet from us. (resolves) Yes, I can build it.
So look at it from the emotionless Observer perspective. They could:
- Develop completely new technology for interstellar research and exploration. This could take decades, possibly decades they don't have, and might not succeed. It does have the advantage that they don't have to dominate their past ancestors which a iron fist.
- Utilize the technology which was apparently either natural to them or easy to develop, dominate their ancestors and fix the problem at hand.
Since apparently time travel wasn't a big issue for them, the only really remaining issue is that pesky bit about feeling bad that you've placed you ancestors into subjugation. But of course - you're an Observers, and you don't really have access to that emotion so your next question is probably about what is for lunch and when is that invasion thing scheduled...