No you dont "need" it, I dont use it at all. If you want you can backup to icloud as you get quite a bit of storage free, but I just connect my iphone to the computer and backup in itunes. You should always do backups, whether you do it in itunes or icloud is up to you.
Its more of a convenient way to do a backup without connecting to computer. If you dont backup then are you ok with losing all your contacts and photos etc if your phone is dropped and broken? I doubt it, so make sure you backup once in a while whether you use itunes or icloud is up to you.