I absolutely use mine for protection and to prevent lens flair. I dropped my 50d with my 70-200 attached on concrete once (Black Rapid Strap Failure). Anyways, because the lens hood was attached, the plastic was able to absorb alot of the impact and likely saved my camera. It was funny, everyone in the audiance shuttered, I picked up my camera and just kept shooting like nothing was wrong - it was pretty cool.
but yeah, I think lens hoods for me are more about protection than anything, I use them both indoors and outdoors.