How is this better than pencil and paper. You don't have to see the button depress to know what the button does, right?
'...this screen looks like.. well you know a stock tableview'
And sometimes these people aren't in the same room/building/country
Simply dismissing the tool because you cant think of a use-case is a bit short sighted.
PS: also when designing for the iphone, elements have a surprisingly different feel when shown on a device.
Users can't interact with paper mock ups.
You have to re-draw the menu on every page you mock up or tell the people you're showing the mock up to imagine it. Both of these suck.