Having all the buttons together makes multiple button presses easier and more accurate (LP+MP+HP, for example). More important in Street Fighter because it has 6 buttons (LP, MP, HP, LK, MK, HK) and most pads only have 4 face buttons.
Three (some people use four...) fingers are better (and faster) than a thumb. I play with pads because I'm used to them, but I use my fingers instead of my right thumb in fighters.
Plinking in Street Fighter, slide inputs in Tekken (example: Yoshi's 2~1), etc are easier.
Shorter distance from neutral and directions allows faster inputs and makes things like this easier:
http://www.youtube.com/watch?annotation_id=annotation_748344&feature=iv&src_vid=7uwfjpfK0jo&v=ISKfZgwRT4U
Most pros started in arcades so they're used to them.
The diagonals of the playstation controllers suck, and the xbox d-pad is even worse.
Wireless controllers have lag.
I'm sure i'm missing some.
