I use favourites on this site because there is no way to go and view all my previous questions/answers. On my own site I use my user activity plugin, of course :)
But favourites are also useful for keeping track of useful questions. When I finally upgrade my site to 1.5 I'll be favouriting a bunch of repeat questions so I have a quick way to close as duplicates.
I'm sure there are better ways for regular users to use favourites, though!