Boarder42, you ask "why would you ever put money into bonds?"
If you're retired and withdrawing the oft-spoken of 4% from your retirement accounts to live on, and you're entirely in stocks, then a 50% pullback like we had in 2008 will reduce your withdrawal for the year by the same 50%. In 2009, stocks gained back half of what they'd lost. Following the same scenario, your withdrawal for that year still would've been 25% less than what it had been 2 years before. This might create a real hardship.
However, had you some diversity in your portfolio--stocks, foreign stocks, bonds, cash--your accounts would've only lost 28% in 2008, and almost back to even for 2009.
Now, my folks are retired and entirely in stocks. That's okay for them, because they haven't touched their retirement accounts, and have no plan to do so; one pension and two social security cheques cover their living expenses (for now). Not everyone is so lucky.