There are plenty of reasons to want to generate an image dynamically on a server. Dynamic image resizing to fit client requirements is one that immediately comes to mind.
Reminds me of how some games or other sites had an image you could put in your forum signatures. I think Steam had one or some third party built it. Would show like the games you were playing and if in game and not... I think Skype and MSN had icons too that was a image but used your profile id in it.
There are plenty of reasons to want to generate an image dynamically on a server. Dynamic image resizing to fit client requirements is one that immediately comes to mind.