You can believe it's stupid and a waste of money and (insert more derogatory beliefs) but in the end they are a company providing a free game with purchasable gimmicks that don't enhance gameplay. I'll admit, I was frustrated and thought that this prestige skin stuff is just the dumbest crap in the world but it comes down to this.... I don't have to pay for it! I can just keep playing my free game with friends and enjoy the Bliss in knowing there are others willing to pay for my college tushy's game.
Also, this is also how a free market works. They are going to push their luck in having the devoted paying players cough out more money until the demand is not equal to the supply (which in this case is players willing to buy it/labor costs).