It seems the primary reason proxy sites have become so popular is that more and more schools and organizations are blocking access to sites like MySpace, Friendster, Bebo, etc. Thus using a proxy site will allow you to access any site from school or work.
Another reason is anonymity. Using a proxy site hides your IP from prying eyes.
Also, some proxy sites claim that using them to surf will help protect against spyware, viruses, and other malware.
I figured I’d start a proxy blog, will update later.