It saves $$$ for the ISPs, but there are no real 'upsides' in it for the user.
In a competitive market, saving money for the ISP is an upside for the user in itself, as the ISP will be able to charge less and/or not go broke. The other upside is speed. For me, my ISP is about 40 ms away and US sites are 300 ms away. I run a local proxy on my home network, partly because my ISP doesn't run a proxy in this state. (They do for users in their home state.)