When I've had to /decided do it, it is so nice when setting up fresh. Everything 'feels' as though you're not carrying old cached data and obsolete elements (but that's probably more imagined than tangible).
I agree that the re-downloading of apps is a pain – although perhaps equalled by the way I've had to nudge loads of apps into actually downloading/installing after a restore (the icons appear greyed out, even though they should be automatically downloading).
I like that with the 'set up as new' method, you see all the smaller tweaks and 'onboarding' Apple have implemented to help introduce new features – some of this seems to be missed with an upgrade and I wonder if that contributes to confusion for less detail obsessed users.
Keeping the old phone in it's current state could one day allow you to charge a premium, if there's a controversial iOS change in a new release, or in an app (thinking Twitter > X), and someone wants a preserved version!