I am quite grateful that the coalition government has chosen to shut down the National ID card scheme. It was unnecessary, expensive, and set a bad precedent for civil liberties in the UK. However, the termination of that program still leaves a (largely) mandatory ID card in place in the form of the photo driving licence. By making the photo optional, it substantially reduces the chance that the licence will become a defacto national ID card, which is essentially what has happened in the United States. Many motorists have no desire or need for a photo driving licence (as indicated by how many paper licences are still widely used) and I feel making the photo optional feature respects their wishes.
One of the elements that makes up a national ID card is a computer database with the photographs of citizens. Should a driver get a photo licence, their ability to prohibit the retention of their photo in a computer database helps civil liberties and reduce the chances of the photo licence becoming a defacto national ID card. I happen to believe that a free country does not require ID nor does it retain a photograph of its citizens in a database.
I understand that an EU directive is involved, and should an opt-out for Britain not be feasible, I believe many motorists would appreciate the availability of a "UK only" non-photo licence.