Beside what Dan mentioned, most of wrist grabs originate from old samurai days when the grab is supposed to stop you from drawing your sword. Obviously if uke lets go of nage's hand, he will be cut down. So even a painful lock is better than a sword slash.
On the learning level, keeping hold on the wrist will teach both uke and nage the principles of synchronization and harmony between the two energies involved, something which is much more diffcult to feel with punches or strikes.
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