Most of us here would not have a real need for Wubi. Linux is
installed on a hard drive, and that is how we roll.
However, I would imagine that all of us know MS users, and that a
large number of us know people who are Linux curious. The people who
are interested in Linux, but who do not want to commit to a full
install, or are not ready to go dual boot, are the people who Wubi was
designed for.
True there are live distros, and they are great for a first taste.
But the loss of the CD/DVD drive limits the esperience (can't play
music or watch DVDs). Additionally, live distros seem not to be able
to store settings for the next boot. (Or at least I haven't managed
it. Which is not to say it can't be done. It might not even be hard
to do, I just haven't stumbled across it.)