The paladin, as someone said upthread, is the quintessential hero--our should be. That is, while fighters, clerics, thieves, and mages might be adventuring to acquire wealth or glory (for their churches, in the case of clerics), the paladin quests so that he can do good deeds. He helps people because it is the right thing to do--always. His orientation is one of sacrifice on behalf of others.
At least, that's the way I've always perceived the class. But that doesn't necessarily mean that the paladin must be lawful good; in contrast to the argument upthread that the paladin must be of some lawful alignment, I would argue that the paladin must be of good alignment. Consider the paladin in the "Quest for Glory" series: he was supposed to have the discernment to know that certain laws were unjust, and should be circumvented and thwarted whenever possible. It was the right thing to do for the paladin to allow the thief to flee, rather than to bring him to "justice".
There were three knights in the Arthurian cycle (at least, in Mallory's version) that achieved the ultimate Quest for the holy grail: Galahad, Percival, and Dr. Jones. No wait! It was some other knight, but I can't rightly remember who it was. Sir Bors, perhaps? Anyway, Percival was too innocent to acheive the grail quest fully (he didn't know to pose the right question at the right time, or something like that). Sir Bors couldn't achieve it because he had sex once. Sir Galahad achieved it because he was the "perfect knight". But Lancelot was the best knight that Arthur had. He was, in fact, a paladin, even though a flawed one: he performed the miracle of "laying on hands" near the end of the cycle. (And I'm getting my information from "The Once and Future King", by T.H. White, which is more or less a paraphrase of Mallory). Lancelot was the one knight that was guaranteed to beat you in a fight. Lancelot was the one knight from whom you could expect mercy when he beat you. Lancelot was the one you went to if you had a problem (According to White's version, it was because Lancelot had a cruel streak, and he worked hard to overcome it). Lancelot is very much a model of what a paladin should be (excepting, of course, doing the nasty with his best friend's wife).
Essentials had two versions of the paladin: the Cavalier of Sacrifice and the Cavalier of Valor. The Cav of Valor could be good or lawful good, but the Cav of Sacrifice had to be lawful good. It was the Cav of Sacrifice that had a power very similar to the traditional "lay on hands", and some other pretty swell powers and features as well. SO...maybe there should be levels of paladinhood? The very best paladins are lawful good, and get the full benefits of their profession. Paladins that are merely good or merely lawful get some of that, but not as much as the LG.