Ok I'll take a stab at this since I don't have any strong opinion about whether they include gear repair or not. I'm not arguing for or against here - just hopefully helping people understand where the other people are coming from. Full disclosure - I played FFXI, WoW, and LOTRO, and am currently not playing any MMO. (Looks like Karelyn beat me to some of this, but I'll leave my wall of text intact in case it does some good.)
(/ma Barfire <me>)
Could someone please justify this need for armor/weapon durability?
There are at least two arguments for it, one of which is basically what you're afraid of. Gear decay can be used to make crafting more a part of the game economy, by making decay permanent or only allowing crafters to repair. I only tried out SWG for a couple of days, but as I understand it, that's how gear decay worked there. Crafted items decay and eventually break, so crafters always have a market. Not as popular with some players, but it does guarantee that crafting can be a money source without falling into the trap of a system where crafters can only make money on crafting a few consumable items.
The other argument, the one you'll run into more often in an MMO, is that from a game design point of view, you have to have enough money sinks to balance your money sources. If money creation (money drops, gear drops, quest rewards, etc.) outpace money sinks, you get inflation. Works that way in any economy, real or video game. Gear repair is a money sink that directly increases the amount of money being taken out of the economy based on how much you play - the more you fight, the more your gear decays, the more you have to repair it, the more money goes out of the economy.
In WoW at least, gear repair is also a small penalty for death - your equipped gear loses 10% of its total durability every time you die, so just mindlessly retrying the same fight over and over and dying repeatedly can get expensive. Typically an endgame WoW player doesn't have to repair because of battle damage (unless they're the main tank) - they have to repair because they died too many times. Players can also repair if someone with engineering skill drops a repair bot, which again takes money out of the economy since the bot is consumable and the repair fees paid to it disappear from the game.
Every MMO has money sinks, or the economy will go nuts and inflate indefinitely; some games just put their money sinks in different places. FFXI doesn't have gear repair, but you have to pay when you want to take a chocobo, boat, or airship somewhere. WoW charges for flight points, but you pay a one-time charge for a mount, and zeppelin/boat rides are free. WoW has gear repair, but nobody is dependent on craftable consumables to do their job, like FFXI ninjas and rangers are. LOTRO players pay rent on their player housing, while FFXI mog houses are free (and WoW still has no player housing, boooo). I think pretty much all MMOs now charge fees on player-to-player sales (auction house, FFXI bazaars, etc.) and on the mail system.
As for the realism debates, the problem there is something that people who write fantasy or sci fi games and stories have to work out all the time - even if you have parts of your world that are different from the real world, it has to make sense internally. Every time you deviate from that, it takes some believability out of the world. Some of that is necessary, because a totally believable world could make for a really terrible game.
For example, NPCs can die permanently, but mobs magically repop all the time, and players can always be revived, because an MMO with real player death will have a very small group of (*********) players willing to put any time into it. ;) When people say it wouldn't be realistic, they usually don't mean as compared to our world, but rather that it's one more way the game world doesn't feel like a real world because real-life concerns are ignored.
Logically it doesn't make sense for gear not to decay, because gear has to be forged somehow, so it's not invulnerable or anything, and it's presented as being made of metal, leather, and cloth, all of which decay naturally over time and definitely deteriorate when used in combat. If gear doesn't decay in the game, that's fine, because some of the realism of gear is already being overlooked, like the fact that you can wear your gear right off the bat without taking it to an armorer to be fitted to your body, and you never oil it or clean it. If they decide to put gear decay in, that's fine too, because it's more realistic to acknowledge wear and tear on gear.
Either your money will go into gear repair, or it'll go somewhere else. In any case, one way or another, there will be small amounts of money you'll be paying into the game as you play which take money out of the economy.
And just to reiterate, I don't really care that much whether gear repair is one of the money sinks in FFXIV, but I can see where both sides are coming from on it.