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Originally Posted by lectricpharaoh
Because you didn't know how to use it, right? Routers don't cause problems that you cannot resolve, and they have many benefits, even those little 'gateway routers' for broadband use. First and foremost is protection. Unless you have port forwarding enabled, other computers on the internet can't arbitrarily connect to yours. It's a form of hardware firewall, though you could be an idiot and rely instead on a software firewall, like ZoneAlarm, NIS, or (God forbid) the 'personal firewall' in WinXP. The next major benefit is connection sharing, but of course this only matters if you have more than one machine on which you desire internet connectivity. A third benefit off the top of my head would be forming a LAN, and sharing resources such as disk space or printers. When I'm at my girlfriend's place, I can be sitting on the couch with my laptop, and print stuff on her printer across the room. I only need to get up to make sure there's paper in the printer, and pick up the job when it's done.
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What's wrong with using a software firewall? Adding additional security measures is hardly ever a bad thing. It might not work as well as a hardware firewall, but it's not necessarily gonna make things worse. That said, I believe that most household routers actually do use software (or firmware) firewalls, and actual hardware firewalls are distinguished from routers.
And as to anything LAN related, a router technically splits up networks into different broadcast domains. You're describing a switch (common misconception about most household "routers", don't feel bad about it). The common "router" is actually a 4-port switch with a routing unit between the various LAN ports and the single WAN port. The one tricky part of the common household wireless router is putting wireless and wired networks on the same broadcast domain. Typically different media types are on separate networks and require a router to go between them; however, in this case the router takes the two different media and shares a broadcast domain across both of them.