Let me first say that I have been modding my phones for years. I have seem edited Moto's, edited the registry on Windows phones, and installed betas on BlackBerrys. None of those made my phones less secure. Rooting an Android does that though.
No one has mentioned the downsides of rooting, so I'll take a stab at same. First, if you root, you've just voided your phones warranty. Something happens, you own it. Of course, there is also the possibility of bricking your phone in the process of rooting it. Note the threads on XDA from folks who are trying to recover their phones after a root job gone bad. A day doesn't go by that someone isn't on one of the forums asking for help.
Now, one of the first rules that noob Linux admins learn is not to run their systems as root, saving root access to be used only while making changes which require greater than user authority. This is taught because root access allows one to do virtually anything with a system including destroy it.
Android is a port of Linux for mobile devices. As such, many of the rules that hold true for desktop PC and server Linux systems, holds true for Android. This is actually compounded on Android, as there is no password for root once the phone is unlocked.
Windows systems suffer from so much malware precisely because, by default, the user is also the administrator on the local machine. If someone (or their malware) can crack your user account, you are pwnd, and your machine is owned. When you root your Android phone, you've done the same, except you didn't even have a password to stop someone.
So, by all means, root your phone to delete a few megs worth of application files, then install your banking app and use it, so that the key generator some black hat can now install across the network, is able to do its thing!