Not really a fan of GoDaddy, but I think their explanation is pretty good:
Quote:
GoDaddy offers Domain Privacy protection, so that when people do a WHOIS search on your domain, we replace your personal information with proxy information (check out the difference). When we do this, your domain name is still yours, but now people won’t be able to discover your personal information through a simple WHOIS lookup.
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I think there have been some cases where having the WHOIS information private caused some issues when a domain registrar went out of business and the rightful owners of the domains were left to prove they actually did own the domains. Not sure if it is a big problem or not.