If I ask Hellfire believers- why is Hell necessary to God- I guess the answer would be that He wants to encourage mankind to obey by threatening us and/or that God requires punishment for any failure to comply with His demands. What other explanations are possible- Hell is about scaring people and making them pay.
If the above is all we can postulate about the reason for Hell, the next question is this- how effective is Hell in motivating people to obey. Of the vast majority of people who claim to believe in eternal punishment, what percentage were encouraged to embrace God because of Hell's reality? If I am of the orthodox persuasion, those who have in fact embraced God are counted within the church rolls. Therefore, even if I assume that every church member is so because of the fear of Hell, that group represents only a small fraction of humanity. In addition, I'd be fairly certain that many church members would cite God's Love for mankind as the real reason for their church affiliation and not fear of eternal punishment. Certainly, in my experience, the average evangelical message rarely mentions, much less emphasizes, eternal punishment as an inducement to becoming a Christian.
On the flip side, we might speculate about the reasons why so many reject Christianity's message. The church would have us believe that men reject their version of God because mankind is morally deficient and therefore resistant to the church's conversion message. A propensity toward evil makes men generally unresponsive to any change which involves righteous living. This is obviously a convenient explanation because it absolves the church of any responsibility for delivering a message which is actually transformative. What they preach can never be questioned, despite its apparent ineffectiveness, because ineffectiveness is the anticipated outcome.
I'd suggest that the widespread resistance against the church's depiction of God, which manifests itself in the extreme as atheism, results precisely from the church's insistence on Hellfire as God's final answer. If the threat of eternal punishment was designed to motivate men to embrace God, I think the real effect has been the exact opposite. The fact that any number of professing atheists are former church members and even ministers, would support this conclusion. For these people, Hellfire not only could not keep them in the church, its actually drove them to the opposite end of the spectrum.
If the threat of Hell does not really encourage men to accept the Truth, that leaves us with the conclusion that Hell is strictly about retribution. In the final analysis, after all is said and done, the real purpose of God as revealed in Christ is to cull from mankind a sacred few who will slavishly worship Him throughout eternity while the majority of humanity suffer the excruciating fate to which they were driven by a self fulfilling prophesy.
It's not a pretty picture and, if there is any surprise about the results, it lies more in those who accept the story and claim to be positively transformed by it than in the others who recoil and run the other way.