I've only taken pictures once and that was for a relatively large dent that wasn't noted on the rental agreement until I pointed it out in which case the agent wrote it on by hand, which gave me doubts. However, the photos weren't needed.
Another time I was accused by Hertz of returning a car with a dent until I pointed out that the only evidence they had was a digital photo taken a full week after I returned the car. They dropped it, though I've never rented from them since under the "fool me once..." theory.
Bottom line is, photos are not needed but if you want to take some pics for piece of mind it can't hurt.