I think that both recreation and entertainment are equally important in the grand scheme of things. There are tens of thousands of skaters learning from thousands of coaches. A few of these skaters will become world class and compete at the elite level. These elite skaters will inspire the children, parents, family etc. to join the sport, and this will increase the amount of skaters and thus the coaches who have jobs. With more skaters, there is a greater pool of talent, and we see the elite level of skating increase-> then the cycle continues and the sport grows. I believe both the recreation and entertainment make up the skating "ecosystem".
More specifically about the point system; there is no reason that the system has be for one or the other. For the recreation side, the system works pretty well (as you can imagine trying to rank 30 skaters). For the elite/entertainment side of the sport, I still think the point system is an improvement. However, we still hear things like: Hanyu fell once and Voronov went clean, WTH is with the gap? When 1 fall occurs, people care less about the fact that Hanyu had: much better positions in spins, faster spins, many transitions, more difficult transitions, literally twice as fast in the step sequence, faster throughout with less crosscuts and the list goes on (everything that COP wants to award). Quite literally, every aspect of skating of Hanyu was miles ahead of Voronov that night with the exception of the fall, and it was only further contrasted by Voronov skating directly after him. Without jumps, Hanyu is in another league or (even two) compared to Voronov.
But are these people who emphasize the fall wrong? Hanyu (like Chan, Fernandez etc.) will always have the better spins, transitions, footwork, speed than everyone else. Should they always have such an advantage over other skaters? The answer will greatly vary depending on the person- it is impossible to make everyone happy. It is up to the ISU to fine-tune the system to maximize the agreement among the public and system/judges- a difficult endeavour, as you can imagine, considering the variety of opinions out there.