Why is the arm hair important?

Armpit hair's primary purpose is to more easily remove sweat from the body, helping to prevent odor causing bacteria to grow. In addition, armpit hair also prevents friction between the arm and side of the body. Finally, armpit hair, helps release pheromones which are believe it or not a sexual stimulant in mammals.

See link:

http://en.wikipedia.org/wiki/Underarm_hair