It serves the exact same purpose as a hard drive. It's storage. The difference is, it is MUCH faster, and therefore more expensive per GB.
Most people are buying smaller SSDs to put only the OS and maybe one or two games, then everything else goes on a normal hard drive.
I'd say having an SSD is still a luxury, and not a requirement. If on a budget, the $100 or so would be better spent on a graphics card for example. You do not get increased frames per second from an SSD. But why I personally have one and doubt will ever go without again is how fast windows boots up, and how fast games boot up. Bamn, you're done.