It does create 32 objects in the loop, every time. The ones you don't see on screen are off screen, they were pushed there by the physics collision resolution. Notice how the sprites stack vertically before spreading horizontally. The two best things you can do is not create the objects on top of each other and make the walls thicker so it's harder for the objects to be pushed through the walls. Also enabling "bullet" in the physics properties may help. It could also be that some of the blocks are falling out over the side walls since there is no top wall.
Edit:
If you're on not getting 60 fps on mobile then physics will go slower. You can change the "stepping mode" to "framerate independent" to fix that. By default "fixed" is used because it makes physics simulations more stable. That just means that instead of dt being used, 1/60 is.