In some situation, where many photographers are cramp together, there will be many chances that your lens will hit others lens, hit the wall, rail, tree etc. A lens hood (hard type) will minimize the damage to your precious lens.
I agree with ST1100. Sometimes, it can be rather irritating putting on and removing it.
Aside from looking "professional", the diameter of the hood is generally bigger than the lens' diameter itself. When the hood is put on the lens in reverse, bigger space is necessary when you have to put in the camera bag.
Sometimes, I just kept the hood at home unless I need to use it.
Original lens hoods are usually optimized for the specific lens. Ie, different lenses have different lens shape/size/cost lens hoods. You can put on a shorter lens hood than the original, but you will not get maximum protection. You can put on a longer one, but you risk vignetting or even pure black corners.
Some original Canon lens hoods also have a velvety material on the inside to prevent reflections from the lens hood affecting the picture.
After a while, you will know the situations when you need a hood - usually under bright sunlight. Stray (not in the frame) sunlight hitting your front element will degrade the picture significantly. Fast lenses (F2.0 and faster) are especially prone to flare when shooting wide.
W/O a hood, you can use your left hand to shade the front element (and shoot with right hand), or you can deliberate position yourself in the shade, or get someone to shield you with an umbrella. i use the first method. Some people are religious about putting the hood on. YMMV.
An hood can cost anywhere from $10 to $100, depending on the lens. There are cheaper third party ones around, about $20.