Because if the mass hits the ground or floor, it is no longer providing a source of energy for the discs rotation (no longer providing a torque to drive acceleration), and our expression is based on converting the GPE of the falling mass into the KE of the disc. 

We don't, if the mass hits the ground the disc still rotates and we can still time this so no problems at all here.

Only because, if the mass hits the ground it could damage something under it.

Because, if the mass hits the ground the bouncing will add extra energy to the disc

Because, if the mass hits the ground it will actually steal/remove energy from the disc.