Prestige Classes, while hardly mandatory, can be used to create a lot of flavor in a game, or to provide mechanical representations for things that come about through role playing and story development. If they are either planned for from character creation, or brought about through gameplay, they can create some excellent scenarios. I created a sorceror for a campaign, and from the start I told the DM that I really liked the Dragon Diciple class, gave him ways to hook it into my background, and left it in his hands. He ran with it, made it a part of the story, and had the changes come about gradually. The twist was, by the time my character began to show big physical changes (claws, teeth, etc.), he had a fiance. She was none too pleased with his new appearance, creating a whole new level of interaction. Eventually he died and was resurrected as a pure human, but it was a really fun situation to play through.
More often than not, our group creates its own PrCl's, which is usually more fun and story oriented than using the ones in the sourcebooks.