Thinking about it, I find it hard to come up with a good, pragmatic reason. Here are my guesses (I admit they are sort of grasping, but I'm at a loss here):
*It originated in capitalization of names, where the purpose was to specially emphasize people's names.
*It serves an aesthetic purpose; it makes the writing looker neater and more organized.
*It is for visual clarity: upper case letters are easier to read, but take longer to write and later lower case letters came in later to make writing quicker.
Additional request: can someone recommend text(s) on the origins and purposes of various 'odd' aspects of language like this?