I send patrol reports for two reasons: one is to simulate reality, the other is when I'm out of fish and haven't reached my patrol area (or haven't been there the entire 24 hours yet) and so can be officially told I can return to port.
As for contact reports, I send them out of realism, too, although I've noticed with GWX that I'll actually see real responses to contact reports other than having the Luftwaffe show up. My last patrol I'd shadowed a convoy after expending all my torpedoes, and send a contact report every 12 hours. After my second one, after a few hours I actually saw appear on my nav map the convoy I was shadowing, with the actual course, speed and location where it was!
I would have loved to see if other U-boats had shown up after a while, but unfortunately I lost contact later that night and couldn't re-establish contact with it.
*edit: I do wish we got more understanding responses to our patrol reports, especially when I've been hammered to heck, my boat is falling apart and I'm still told to be 'more aggressive'!