No, BC is just cool to have but it has no practical use.

It may not be useful for some people, but it is highly practical for others ...

Over the time a person owns a console they're likely going to build quite the library of games, and even after they replace that system they may still want to play those games. Very few people have the space to hold onto all the systems they owned so backwards compatibility allows people to play games they used to (really) enjoy. Now, the portion of the userbase that sees value is related to how long the new console has been on the market; but it is still significant throughout the life of the new generation of consoles.

Now, the PS3 and XBox 360 are good examples of why Backwards compatiblity should be considered early in the development of a system; and they should also consider how future consoles will be able to run the games of the system they're developing. For over 15 years hardware abstraction layers have been common between graphics cards and games on the PC, and (while VM ware is only now really mainstream) the principles of virtual machines have existed since the 1970s on mainframes, so it is quite unfortunate that console manufacturers are still not creating an environment where the software is more seperate from the hardware. Certainly, when you're dealing with the Playstation or N64 (or older systems) and software development is handled heavily using assembly language to get the absolute best performance this may not have been a viable approach; but the last generation of consoles, and especially the current generation of consoles, should have been designed in a way that makes backwards compatability easy.