Having worked at Swype, I can tell you why most of those are there.
Record audio- see the voice recognition button? Required for it to work. Lots of people like voice recognition
Get my approximate and precise location- download dictionaries of local places that wouldn't be in the normal dictionary.
Read my text messages- train autocorrect algorithms
Full network access- upload dictionaries to the server/download your dictionaries to a new device. Also their whole theme download store.
Pair with Bluetooth devices- bluetooth headsets
Read my contacts- we scan your contacts to add the names to the dictionary, so it will allow you to type your friend's names.
Read terms I've added to the dictionary- Swype has its own dictionary, but if you added any to the device's we want to add those to ours
Read phone status and identity- literally this was to turn off typing noises when on speakerphone
Modify or delete the contents of my USB storage- to allow you to store the dictionary on a connected device, if you wanted
If you want a smooth app that integrates with the OS well, you're going to need a lot of permissions. There's just no way around it.