When there were a few national registries, geographical aggregation worked. Now that there are many and this is causing problems. Since there are still many 16Mb routers still out there and since there is no way that many can replace their routers before a year has past, CIDR fragmentation is becoming a big problem.
Provider based addresses tend to work until a customer changes providers.
It will prevent big problems during route flaps and it will make these small routers last longer. IPv4 space is not unlimited. Sprint is projecting exhausting the space in 18 months or so. Eric Carroll says that we are rationing ip addresses now since he says that the InterNIC is requiring engineering plans. Eric Bennett from AADS says that the InterNIC is doling out address space and it important that many providers appreciate the complexity of managing space effectively.