If you want your Animal Crossing town to look great, it is best to create dirt paths.
Also if you play this game all the time, running everywhere, your town could eventually become a desert, which means you no longer have grass. Your grass slowly gets destroyed. If you create paths, then you have main routes to run on, meaning you WALK everywhere else. (saving your town from desertification)
I don't have a desert, here is a link of a town that is almost a desert, but there apparently is still some grass (i couldn't find a picture of a town that had a full desert and I don't plan on destroying mine just for a picture) - http://media.photobucket.com/image/desert%20animal%20crossing/GNuts/Animal%20Crossing%20City%20Folk/2009_1/2009_1_15/RUU_0182.jpg?o=5