I wouldn't miss them if an event didn't have them. I think of them more as part of the decor--we don't really need chair bows or centerpieces either but they look pretty when everything is all set up, and I think they can add to the atmosphere, especially the more clever ones that match the event's overall theme. IME shower favors tend to be a bit more fun and casual than wedding favors, which often run towards bland yet dignified.
I think if people are going to do them, they should try to come up with something unique, personalized, and useful. Of course "useful" is in the eye of the beholder. Small is also good. If it's small enough and has the couple's name and the date on it, I probably will keep it, and remember them whenever I glance at it. I'm cool with this. But, if they didn't provide a personalized favor, I would probably keep the invitation or something anyway as a memento, so it's not exactly necessary.
Alternately, they should be edible, and good
. If you're going to spend the money on them, get real M&M's or Hershey's kisses or Jelly Bellies (at least, *I* think those are yummy) and not the generic ones. Quality over quantity.
For people who like giving favors, I feel like they do think of them as a little extra "thank you," something that the guests can take home as most receptions don't let you take doggie bags of food away. If it's something edible and yummy, I always gobble mine up right away, but I feel a little gauche doing so, like I was supposed to take it home first.
Storytime: When my friend Amy was planning her wedding, she felt that of course, she needed to have favors. But then, she had the brilliant idea of making a donation to a charity with the favor budget instead. So then she didn't need to buy actual favors, but she spent extra money printing up little info sheets about the charity to put at each place setting instead, telling people what a wonderful thing she'd done by donating this money. Then, the wedding ran over budget, so she repurposed the donation money to pay for something else, like the cake or the dress. There wasn't anything tangible attached to it, see, so she could use it for something else. It was only several months after the wedding--with some nagging from her mom--that she actually made the promised donation to the charity.
Now this is what I think about whenever I see that someone has done a charitable donation as a party favor. "Did they really
donate that money, or are they just telling
me they did?"