Our favorite heroes
When I think of story telling and heros my best example is Indiana Jones. Indy is a mild mannered intellect looking to preserve his interests for the university. When he faces danger or opposition, he rises to the challenge. What makes Indy look so good? The villain.
I would argue that Indy is better when facing the ultimate evil of the 20th Century, Nazis, than when he is matched up against voodoo doctors or aliens. The more maniacal, mischievous, underhanded, two faced, and just plain mean a villain is, the better our hero is portrayed in the story.
The villain is tempting. Our hero may think, "There may be some good in them still", "I can help make them better", "they can't be all that bad". It is the weakness of the hero to believe that the villain is on the edge of redemption. It supports the idea that if the two of you were to just sit down in a room and work these things out, we could find a reasonable solution. This is the strength of the villain - little to no reason. Villains want what they want and will do anything to accomplish it, lie, cheat, double cross, kill.
It is the resistance to this villainy, the opposition to be seduced by sweet words and empty promises, that allows our hero to rise above the challenge.
Hero's need villains. Great hero's need great villains.