This Approach is particularly helpful when one needs to implement loosely coupled integration using Web Services from a Multi Tangent (Application Service Provider Model) type of front end.
If each client needs to invoke a different web service and the application needs to pick the Web Service URL dynamically during runtime (depending on the client), it may not be possible to set Visual Studio.NET 2005 Web References to each and every client URL.
Just finished writing an article on this @ Code Project. Read it here:
http://www.codeproject.com/cs/webservices/CallWebServicesDynamic.asp