I have games that are pushing 50 gigs each.
It doesn't take many of those to fill up a 'small' SSD, and copying things back and forth between an SSD and a hard drive when you want to play a game gets annoying fast.
And yes, games benefit from being on an SSD. Besides the levels loading faster, I get much smoother framerates in games with large textures when playing from SSD. Seek times matter.
(This is especially visible in games that stream loading, like MMOs. Lord of the Rings Online, in particular, benefits from fast seek times; the framerate is visibly better on an SSD, particularly when riding a horse.)