The most basic benefit of this is obvious: improved empathy. A character's dialog and actions have more emotional impact when those actions correspond well with the character's physical expressions.
Another benefit is to replace dialog entirely. Animating is not simple, but it's cheaper and easier to refine than hiring voice actors. It also saves valuable memory space. Silent expressions often have the greatest effect. But I expect refining such animations would be very difficult, considering that even good actors have difficulty replicating some emotions, like despair and terror.
The use of animations that brought this subject to mind is translation. Having taken many linguistics courses in college, I know that not all body language is universal across the globe, but the basics are.

On the one hand, you have games like The Saboteur. The game is set in Paris, so one might expect some of the dialog to be in French, even if the majority is English with a French accent. A bit of dialog local to the setting can add flavor, and good body language can make that dialog more meaningful.
On the other hand, there's the inherently national nature of any game. Games published worldwide either pay translators to adapt the dialog or apologetically ask foreign players to enjoy the game as it is. Something is always lost in translation, and body language helps to counteract those losses. And while great facial animations won't allow foreigners to play a dialog-centric game, it can be pivotal in action and puzzle games for making environmental dialog bearable.
Anyway, the usefulness of better facial animations and body language in games seems obvious. What's less obvious is whether or not each developer must tackle this issue on their own. Might it be possible for a company to develop a program for such animations to be used in a wide variety of games by different developers, similar to something like SpeedTree? Or must representation of the human face evolve only as a collective effort, like the modeling of skin or eyes?
