Why does George Orwell use animals instead of humans?

The idea of using animals in a satiric allegory has a long history. Probably the most famous example, prior to Animal Farm, is in Book IV of Swift's Gulliver's Travels, in which Gulliver encounters the realm of the Houyhnhnms, a race of intelligent horses who embody virtues that human beings, in Swift's view, lack. In John Dryden's satiric religious allegory The Hind and the Panther, the two title animals represent, respectively, the Roman Catholic Church and the Church of England. But your question as to why Orwell uses animals in his own satirical work can best be answered if you look first at the actual events of human history portrayed by Orwell in allegorical terms.
If we see Animal Farm in its most specific meaning as a parable about the Russian Revolution, the animals symbolize the Russian people apart from the ruling class of the Czar and his administration, the aristocracy, and the wealthy people generally. In less specific terms, the animals can be seen to stand for working-class people or, more broadly, non-wealthy people in any place and time throughout history. The wealthy, the rulers, are symbolized by the human Mr. Jones, the owner of the Manor Farm before the animals chase him out. Orwell is making the sharpest contrast possible in his portrayal of the ruling class, on the one hand, and the rest of the population—especially the working class—on the other. By making it a human vs. animal distinction, any doubts should be erased about how severely working people, in Orwell's view, have been oppressed throughout history.
But as in other satires, the use of animals also gives an irreverent, humorous tone to the allegory, in spite of Orwell's sympathies obviously being so strongly with the ordinary working people of the world. This is in keeping with the rather cynical message of his fable, in which it turns out that even among the oppressed ones who carry out the Revolution there are those who are primarily interested in seizing power for themselves, rather than in helping the other "animals."
This, of course, is exactly what happened in the actual history of the Soviet Union. What presumably was meant to be a workers' state with equality for all ended up a brutal dictatorship under Stalin, who made Russia even less free than it had been under the czars and killed millions of his own people.