There are several things at play here.
One is the latency as mentioned, which is very important for VR. Heck even playing with a mouse and a regular monitor I can feel the difference between 60 Hz and 120 Hz, not to mention 30 Hz. At 30 it feels like my mouse is submerged in honey. At 60 it's decent but if you switch suddenly to 120 it you do notice that 120 is quite responsive in comparison.
Then there's also motion blur. Due to the way most LCDs currently operates, they introduce a lot of motion blur. This is beause the image is shining for almost the entire frame ("sample and hold"). The eyes tracks the motion, expects to find the object has moved but get's conflicting data because the monitor is still displaying the same old frame. This causes a perceived motion blur.
This is unlike "modern" CRTs for example, where the image faded quickly (within 2ms or so). For the rest of the frame the monitor was effectively black. That is much better for the eyes, and results in smoother perceived motion at the same framerate.
Even at 120Hz motion isn't completely smooth if you use sample and hold. Newer LCD monitors can strobe the backlight to get an effect similar to CRTs and thus reducing motion blur.