They are not mandatory but they do make connections much more secure and easier. Real estate on the back of modern receivers is at a premium and it's really, really easy to short them out. All it takes is one teeny weeny widdle stwand to kick in the ol' protection circuitry.
Personaly, I will NOT attempt hooking up a multi channel HT, either my own or a friends, without banana plugs. If they want me to hook it up for 'em, they are gonna blow for RatShack cheapo banana plugs or else they do it themselves.
FWIW, spade lugs work well also but they take up more room and are more difficult to connect to the HT. I'd use then on speakers but I still prefer bananas, though.
Now, on my trusty old two channel Marantz 2270, I have no problem with bare wires. There's room aplenty back yonder.