Well... Pretty much why I tend to think defrag is a solution is I'm used to cleaning up machines that are at an obscene level of fragmentation.
I don't care how fast your hard disk is, having 5,000
plus fragments in a single file will do murder to the access time.
All under the watchful eye of the OS. Probably there were secondary causes, such as essential Windows services being shut down to save memory or something, but I've seen it enough (at least on Vista, dunno about 7, I stopped doing repair work regularly before 7 became common in my area). Maybe Windows doesn't have that problem anymore, hence why I will check this as I posted previously. Although I will say, if you re-install your OS regularly, obviously you probably won't be seeing severe fragmentation, so do keep in mind that some people run their OS for 5+ years.
If Windows does indeed do as good a job as you say it does, that shouldn't be a problem, however.
EDIT:
did some research . (MSDN blog) Looks like 7 really is the sweet spot for auto disk defrag. Although the
one caveat is that you must let your system idle for auto defrag to work, perhaps this is what I was seeing. In other words, if you always start your PC, use it, and shut it off, it will never defrag, as it will never be idle.