Saw this discussed at the FPI blog and it reminded me of the time a parent asked me to recommend books to her for her early teenage son. I took her over to a stand full of great stuff, and asked her his age. She knew that, at least. I then proceeded to ask what else he reads. She didn't know. What was the last thing he read? She didn't know. Okay, I continued, what TV shows does he watch? DOCTOR WHO? ROBIN HOOD? She didn't know. What're his favourite films? She didn't know. Does he play computer games? Yes. What're his favourite games? She didn't know. What bands does he listen to (more of a clue that you'd maybe think)? She didn't know.
So yeah. Age banding on kids books is crap, but so is not having a clue about your kid's sodding entire cultural life. I reckon age banding is aimed pretty much at people like this, who want an instant solution to the minor problem of casually selecting a book at their local Waterstone's without spending any real time or mental effort, or even bother consulting a staff member who'd probably be delighted to give you the benefit of their knowledge and experience.
Gah! This why kids are hanging 'round street corners with their hoods up, listening to hip hop, stabbing each other! I blame Thatcher, etc.