>From the SQL server books online.

Stew



"The benefits of using stored procedures in SQL Server rather than SQL
programs stored locally on client computers are: 

They allow modular programming. 
You can create the procedure once, store it in the database, and call it any
number of times in your program. Stored procedures can be created by a
person who specializes in database programming, and they can be modified
independently of the program source code. 

They allow faster execution. 
If the operation requires a large amount of Transact-SQL code or is
performed repetitively, stored procedures can be faster than batches of
Transact-SQL code. They are parsed and optimized when they are created, and
an in-memory version of the procedure can be used after the procedure is
executed the first time. Transact-SQL statements repeatedly sent from the
client each time they run are compiled and optimized every time they are
executed by SQL Server. 

They can reduce network traffic. 
An operation requiring hundreds of lines of Transact-SQL code can be
performed through a single statement that executes the code in a procedure,
rather than by sending hundreds of lines of code over the network. 

They can be used as a security mechanism. 
Users can be granted permission to execute a stored procedure even if they
do not have permission to execute the procedure's statements directly."
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