It certainly doesn't help the passengers, I find the whole Easyjet / Ryanair experience a nightmare for that reason: scrum round the gates at boarding and everyone trying to get a seat at the front. Wiggy's point is exactly right, the queue to get on the plane backs down the steps etc as those who bagged rows 1 - 5 faff about getting their seat.
Computer systems are cheap as chips these days, seat allocation software must be pretty old hat I'd have thought.