Windows Home Server is based on the Server line of OSes, rather than the 'desktop' line, first off. But that's not really the point of it.
WHS is meant to be a file server/backup utility/media streamer for the home. It comes with a connector that you can install on your normal computers that monitors the state of their antivirus/spyware and does automatic backups nightly. It also has common shares already set up for you, and it adds the ability to play your media files over your network.
In short -it's nothing you can't do in Windows 7 using 3rd party utilities, but it's all set up for you and pretty dang easy to use. I have the old WHS and it's been wonderful. Backups have always worked and saved me a couple of times, and after teaching my wife to save stuff to the server instead of her desktop, it made it so she could always get to her things, no matter if she's on her desktop or laptop.
If you need it or not is a question you'd have to answer. I personally wouldn't have much use for it if I didn't have as many computers as I do, but in my setup, it's been very useful.