At least one reason I know that people downgrade thier Wii console, is to regain functionality with thier modchip/homebrew applications. For example, the latest Nintendo firmware update (3.2) supposedly disallows games that are Trucha signed.
Trucha signing (best I can explain) is a "fake" signature on discs/applications run on the console, to make the console think that what it is running is legit. If this happens (based on the modchip), burned games may no longer work. Therefore, a firmware downgrade would restore the functionality lost by the console being upgraded.