Yes, there are reasons to keep the original, DRMfree ebook. If you want to change formatting later on, it's less of a problem doing it from the original than a changed copy. Ebooks just don't take up that much space. I have to say though, I haven't gone with the bother of redownloading my Amazon library just to get the AZW? format.
Audiobooks are a different matter. They take a lot of space. I have both MP3 and M4b for favorites. Everything else is Mp3.