Before we start assuming they are going to build down into Niagara (which they are obvioulsy planning for)...They are probably getting the system all in order, so that in case in the future when they expand into Niagara (which I really do see them doing - think of the tourist $$ to/from Niagara Falls), they're all set and ready to go.
That said, think the the benifits for GO Transit. Brock University would get more students from the Golden Horseshoe that don't drive, St. Catharines could be a bedroom community for Toronto for those who don't drive, Niagara Falls (especially the Casino) would become a "same day" trip for lots of people in the Toronto/Mississauga/Oakville/Burlington/Hamilton area as now you'd have frequent trips, not just a few busses (that are fairly expensive) every day. Communities like Port Colborne which have a HUGE tourist draw in the summer would now be accessible by cheap transit (at least as far as St. Catharines), instead of taking the Greyhound which is $52 return.
Personally speaking, I really do hope GO starts running frequent service down to at least St. Catharines. It really isn't THAT much further past Hamilton, and I'm sure the extra ridership they'd pick up would be more than worth their $$$. If they built a tower in Fonthill (where the Fleetnet tower is), they'd have seamless coverage between the Waterdown site and Niagara.