Why do people buy preamps if they can directly connect amp to stereo source/phone/PC/tv?

@jnovak  +1 

Spot on ! 

3 reasons...

1. Source selection
2. Volume control
3. Fix/help impedence differences between source and amp

^^ In addition to that, a good preamp provides control over the interconnects and in so doing, allows the system to be more neutral. This function seems to be the least understood, but seems to be pretty important, otherwise the system only sounds as good as your cables.
The funny thing? People often talk about a 'straight wire with gain' but the truth is that straight wire can introduce colorations unless properly controlled! That is because wires have a dielectric, can pick up noise, can have stray capacitance issues and so on. There is a bit of mythology there...

A good preamp can introduce tubes into the sound.  I also have a passive pre with the same Alps Blue.  The tubes add a subtle difference that can be varied by rolling tubes.  Yet, the passive is no slouch either.  I am running balanced interconnects.  Your mileage may vary.

You have to hear it to believe it. Listen to a quality preamp, then try to bypass it, source right to amp. Even easier these days with digital volume control on Jriver. For me, the sound is flat without a pre. With my tube pre (Eastern electric mini Max), the sound is alive, plucked strings sound juicy, the violin is sweeter, everything has greater presence and life. It's truly the heart of the system.