I work as a contractor and having a bond is almost as important as having a hammer. First of all, it is an important assurance for the client. They know for sure that mistakes made by the contractor will not affect them, or not affect them severely. It will still be a headache to get the project finished, but at least they are not out a lot of money.
Contractor bonds are also important for the contractor because they ensure that work will be finished even if your contracting company cannot finish it. Sometimes jobs fall apart for unpredictable and unavoidable reasons. It is nice to know that instead of leaving a half built structure that will either get torn down or fall into disrepair, someone will come along and finish the work. You want to know that the work you put in was not all for nothing.