[technocat]

Typically it is only holding the heat until it can escape through the muffler. I don't believe it actually lowers the engine temp any more than a few degrees. This would be because the heat that would normally come off the pipes would "pre-heat" the air that is destined to cool the engine. Mostly I think it's for looks but it can provide some benefit.

However, the cost-to-benefit ratio seems high.