It rallies US citizens together & encourages harder attitudes to Iraqis & the negative activities going on there in Iraq.
Ultimately that serves their purpose. What the insurgents most need is for the US to portray itself to the majority of Mid-Eastern peoples in the worst light possible. They knew this would get us riled up. All one need do to see how well this worked is to speak with a few Muricans. Last night at the office the cleaning crew was talking about "leveling every mosque and killing every Iraqi, re-instating the draft and lining up thousands of troops on the Iranian border so those 'rag-heads' don't get any ideas", etc.
That sentiment from us is exactly what they wanted. They want us to become just like them.