It would be a lot cheaper than the alternatives we know of and we think having a cheap way to give people bitcoins in real life is an important step into mass introduction.
There's definitely demand for them.
At some point though, when these start being used in commerce there will be counterfeits appearing though. So it has to be presumed that at some point these definitely will be redeemed (other than those kept by the original buyer) and thus paying the least cost now is important so that there is less regret later when the bill gets destroyed in order to be redeemed.
After seeing the ease-of-use of the scan private key functionality in Mycelium wallet, the use of paper wallets and other private key transfer methods will be something more common, I believe.
