They unlocked bonus stuff. New multiplayer skins, art galleries, a clank backpack for your singleplayer character, mirrored levels, that kind of stuff. Skill Points were introduced in the Spyro the Dragon series, I believe in the second one. They WERE a staple in most Insomniac games until R2, really.
So, there isn't anything like that in R3? I really don't like how PSN Trophies 'replaced' skill points. The trophies aren't even close to the kinds of things they had you doing in RFoM. Oh well, I'll pick this game up when it hits greatest hits. I'm sure the game is going to be fun, but it'll be a one-sitting ride with probably little incentive to replay the main game and I don't give a shit about the competitive multiplayer.