It definitely makes sense for Boba Fett's story to be there - having to do with Jabba, who lived there.
But I still object to a lot of what was written for Episode 1. (I mean, I accept it, but I don't like it - it could have been so much better).
For example, in a galaxy-wide republic, there could have been millions of planets to go to when you're low on fuel. Then again, I object to Anakin being born there too. That was, IMO, a foolish and uninspired choice by Lukas. It certainly makes Obi-Wan taking Luke there to "hide" him make little sense. We can make excuses for it (Vader would never want to return to that crappy place, say) but it's a far cry from things that were implied in the original series (that it was so far out of the way that very few people would ever even think of it).
As far as it being a vibrant place with crime bosses and stuff, everywhere should be a vibrant place with cool stuff going on, no matter how unimportant and out-of-the-way it is.