I guarantee that the real impetus for the project in the researchers' eyes is to understand how an identical* instruction manual (ie., genome sequence) in every cell can give rise to a plethora of cells that do very different things to make a functioning dynamic human. In other words, for the most part, it appears that there's the sequence information and then there's how you use it. ENCODE (and modENCODE) are about how you use it.
fyi: I'm a researcher in the modENCODE consortium, a sister project to ENCODE, aimed at characterizing functional regions of DNA in two model organisms, a small worm and the fly. My PhD advisor was funded by ENCODE as well. I obviously find this stuff fascinating and important.
The principal finding reported by ENCODE is that the proportion of the genome which has no ascribed role has now dropped to 20%, 5% codes for "traditional" genes and 75% is this new stuff. A lot of that new stuff appears to be regulating the activity of the traditional 5%.
As to the motivations of the scientists involved, they will be a mixture of pure intellectual curiosity and the quest for cures to diseases. Of course they also would like to be paid, and must therefore dress some of their motivations in language likely to motivate their ultimate paymasters, i.e. the public.
It is not a bad thing that every once in a recession less fruitful areas of research are trimmed from funding to make room for more important work. To often scientist lose sight of why their research is important, and forget about trying to solve real problems. That said, too much money is poured into military research and not enough into basic science, which is what pays off in the long run.