You don't need NTFS, if you don't use its features such as encryption, compression, user-permissions.
On FAT32, maximum size a file can be is 4GB. But in NTFS a file can be as large as its Partition size. So if you want to work with DVD ISO images then you may need a NTFS partition with larger than 5GB.
(Disk journaling ?)
NTFS maintains a log while committing changes to filesystem. It uses this log in case of power failure or other system problems to repair and maintain integrity of file system. On other hand, FAT32 lacks this feature and runs chkdsk or scandisk when system is restarted.
It is false that NTFS gets less defragmented. No file system is free from fragmentation and IMO NTFS gets fragmented more than FAT32.
Yes, Defragmentaion softwares such as diskeeper defrags NTFS file system more quickly than FAT32. Because Diskeeper just defrags files on NTFS but on FAT32 it places recently accessed files in begining of the partition, hence it takes longer to finish the job. But PerfectDisk and some other does not work in this way and takes as much as time it takes for NTFS to complete the job.
It is natural that M$ recommends NTFS over FAT32, because of its security.