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I convert to mobi because I use the Send to Kindle app exclusively - it's a lot more convenient for me than physically attaching the Kindle to my computer every time I want to send a book over (+ some books I want to keep in the Amazon cloud). And Send to Kindle can't even see azw3, never mind send it.
For ordinary fiction, I've yet to come across any issues with epub -> mobi conversion. Perhaps if I read books with more complicated formatting or extra features (not even sure what they'd be? mathematical formulae?), I'd need azw3, but as it is, I can't really tell the difference.
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