Because there are so many mutual funds available that each have their pros and their cons, it is easy way to diversify one's portfolio. You could put a portion of money into an aggressive growth tech fund and another portion into a more stable fund that might not make as much money, but will not be as violatle in an unstable market. Each mutual fund has its own mix of investments in it and that can help you save and make money for the long run.
I think they are. They take some of the risk out of investing in stocks and they allow you to do so pretty cheaply. If you pay a broker to pick individual stocks for you, you are first of all paying high fees and second of all trusting that those individual firms will do well. With a mutual fund, your bets are hedged. It's less risky, though you will not have huge returns like you might if you pick the right individual stock.