They were killed off, storywise, because Shinra doesn't care about peoples' lives or the planet, proving Avalances point.

It was a pivotal event in the game because had they not died, Barret and Co' would've continued to blow up reacters and causing mayhem. Like Barret realizes late in the game he didn't go about fighting Shinra the right way. Plus, Cloud wouldn't have discovered Jenova/Sephiroth, and the whole rest of the game after the deaths of Biggs, Wedge, and Jessie wouldn't have come about.

Fate works in sad ways, sometimes.