I'm a Water Babies teacher, so you can guess my answer! Swimming is a fun, sociable way to exercise and few sports exercise every muscle (including cardio-vascular) as effectively (I'm hypermobile, too rabbitstew.). For babies and small children it allows them freedom to move that they can't get on solid ground, therefore develop muscles they wouldn't otherwise. It is beyond me that in a country with a childhood obesity problem and a dodgy climate there aren't much better, more affordable indoor swimming facilities! Makes me cross.
With the life-saving issue, it's obvious that a) being confident and able in water will reduce an individual's risk of drowning and b) if you're confident with water and spend more time in it, you're taking more of a risk - if you never go in an aeroplane you're not going to die in a plane crash, are you?!
Apart from where the conditions are extreme drowning occurs quickly where the person panics and doesn't know what to do. While being able to swim an efficient front crawl isn't going to save you in a freezing, fast-flowing river, being confident and not freaking out will help in most situations.
We teach babies and toddlers to flip onto their backs (helpful in the bath/paddling pool) and float and hold on to the side/something that floats as well as making sure they're comfortable with swimming under water.
I had a 15 mo baby in one of my classes who fell into a pool on holiday, and before his mum (who was right next to him) had jumped in, he had kicked up to the surface, turned round, grabbed the side and was starting to pull himself out.
But Letchlady - your point is a very fair one - my DC's confidence goes beyond their ability and they are, quite frankly, insane and fearless in water. However, once their ability matches their confidence, they will be very able swimmers.
I did Water Babies because I love swimming. I enjoyed the classes so much as a sociable, fun activity that my children and I loved, so I trained to be a teacher - fab job!