There's a very important point that I feel Alan and Dan have missed here...
All RPG's are inherently a competitive medium.
I'll grant the fact that in some games, many, many sessions can progress with nothing more than character interaction. John's campaigns are certainly an example of this, where characters that are technically NPC's can spend five or six hours at a stretch having conversations with other NPC's for no real reason whatsoever other than the fact that's it can be pretty darn cool. Fine and dandy, this is. But what happens when a war party assembles to troop out into the wide world and kick some serious arse?
That's when having characters balance out against each other becomes vitally important.
Any good GM knows how to properly 'scale' his encounters and NPC villains to his PC's. This means that 1st-Level D&D characters generally won't find themselves fighting a Torrasque, or a 100-Point Amberite won't find Benedict and Brand kicking down his door in the first session, gunning for his head. Similarily, a 20th-Level Mage/ Fighter/ Cleric hybrid who has become a God won't find those three Orcs much of a challenge, and a 350-Point Amberite in a Throne War will likely not find a 25-Point NPC much of one either.
But what happens in a mixed party?
Rake at the Gates of Hell notwithstanding, PC's usually clump together in groups during their adventures. So suppose you have one PC with 150 in Warfare, another with 150 in Psyche (and requisite powers to go with it) and another with 30 points in Strength. Which is his primary Attribute. How will you set up an appropriate encounter for this party? Any villains strong enough to pose a threat to the first two will easily chainsaw through the third, and anything weak for the third to take a shot at will be easily cut up by the first two.
Granted, this is a simplistic scenario, and I'm sure those of you out there with Mad Gamemastering Skillz have already thought up two or three ways to dance around it quite neatly. And it's admittedly less of problem when characters are 'near enough' to each other; a five-point difference probably won't make much difference in Amber characters, nor will a 5th-Level Mage and a 6th-Level Mage have all that much difference.
But my point remains. Competition is an integral, and most often the PRIMARY, focus of the vast majority of RPG's in existence. And whether the PC's will be competeing against each other, or teaming up to take on the world at large, there definitly has to be an element of balance between them all. This is not neccessarily realistic from an in-game perspective (although a good GM will likely manage to make it so) but it's the most fair way to handle things from a meta perspective.