Like any other method of constraint, crates can be used wisely or abused. In an ideal world, we could let our dogs have free run of the house and they wouldn't chew or pee anywhere. Most of us live in places we either have no yard at all or where it would be irresponsible to leave the dog outside (because the dog can scale the fence, there's heavy traffic nearby, or because of the risk of theft or injury), so most of us don't have that option. Crates are useful, then, when leaving the dog alone in the house poses a threat to the dog (eating things: choking hazard, stomach hazard, and can be toxic), not to mention our stuff. Many adult dogs can be left with free roam of the house with no problem. Many other adult dogs and puppies cannot.
Crates aren't limited to America, either. I've recently moved from the states to the UK and find they're just as widespread here. Myself, I've only used crates with my last two dogs and they've completely changed our lives - the dogs are calmer, settle more easily than the ones who aren't crate-trained, and were housebroken more quickly. The dog mind reacts well to crates and, when used in moderation, provides them with a sense of comfort. Our newest puppy already climbs in his crate periodically throughout the day because it's his favorite place to rest. It's like a security blanket.
That said, I don't think it's ideal to leave a dog in a crate for more than a five-hour stretch during the day. If a housebroken dog can be trusted not to gnaw on everything in sight, he should be allowed to roam the house. If he isn't to that point yet, it would be a good idea to get a dog-walker to visit in the middle of the day, so he can stretch his legs and use the outdoor facilities. Eight hours in a crate isn't just a strain on the bladder and bowels, but is extremely boring... it's hard on the dog's psyche.
But, we don't live in an ideal world. Get a dog-walker, and you'll know you're doing the right thing by your pet.