The theory is that washing the chicken (or any fowl) removes all of the contaminates from the surface and cavity of the bird (ie salmonella, etc.). People will be in one of two camps - 1. those that have been told to do all of their lives, so they do it, and 2. those who don't because it is really not necessary. You cook your birds to a certain temperature internally for a reason, that is to kill all of that stuff.
Really, the truth of the matter is that there are far higher risks in washing the bird and spreading all of those juices all over your sink (thus contaminating the sink and possibly some work surfaces).
There is no increase in flavour, there is no practical reason to bother. Professionally, it is not done.
However, having said that, the one time I do rinse and pat dry is when I am applying a rub. It ensures that the chicken is dry and I can effectively rub, instead of the rub turning to a paste.