For the magic and hero, you don't have as much of a reason.
The Dream/G1 is more limited memory wise. App2SD allows apps to run from the SD card, and you can setup the phone to use a small 32MB swap file to help alleviate RAM issues.
Cyanogen also uses a different scheduler which is more lightweight and actually more effective for a cellphone.
It also included various new features, like better camera software for one, but those are all in a state of flux. One addition that I found useful, is that it allows me to connect to networks running more advanced wifi encryption, something that was impossible on the 1.5 ROM.