why is a step up transformer used

Personally I get a cartridge with enuf gain to drive your phono pre-amp w/out noise. Step up's are a compromise, IMHO of course. You can get more gain though and if your not too fussy........

I think you might be confusing a step up transformer for A/C power with a SUT for phono?

An A/C step up lets you use a lower voltage device, like a 100 volt Japanese unit, in the US or other country.

A SUT, takes the very low voltage of a cartridge and boosts it, so that a normal phono stage can use it.

The Krell KPE has internal adjustable gain settings. It should be able to drive almost any cartridge out there.

Here is the manual:

http://www.krellonline.com/assets/support/0057_017_MAN.pdf

It is used because the gain of the phono stage is insufficient for the cartridge used. Low output cartridges are popular because MOST think they sound better. The immortal "MC or MM thread" shows that this question will never be settled. Good SUTs sound very good; it is your choice.