Email is used for project updates, social invitations, layoff notices, inspirational quotes, scorecard updates, meeting invitations, documents, spreadsheets, presentations, conversations from list serves, family news, server notices, project updates, notifications from Sharepoint, syndication feeds, and on and on.
Even if it's not the best solution for most communication problems, email is the default communication mechanism. (Yes, I am aware of the shift to instant messenging amongst the always-on crowd.) In fact, I just sent a note to my family to point them to Notifyr, so they can learn about new photos of our lovely children, rather than my needing to send them an update or their needing to visit my Flickr page on a regular basis. (They aren't hip to web feeds yet.)
With this adoption as the universal application for business and personal life, there is massive resistance to changing away from it, even when email isn't the best suited to the type of interaction. Even where there is a better solution, such as an informational repository in a wiki or a document management system, these frequently have a email notification of changes. For most people, email - or their email tool - is their default operating system.
There is a renewed conversation on this topic, which I first noticed via Jim McGee's Why email continues to be a poor project management tool and then saw that John Tropea has posted a nice overview in Email for collaboration? with some of the pros and cons in the discussion. Go have a look.