In a recent blog post, Jani Hartikainen looks at a two things that might make templating tools a bit more useful - better than just dropping data into a template.
Most template engines simply wrap PHP (or some other language's) syntax into their own syntax, and maybe they look a little bit cleaner when mixed with HTML. Some may even provide useful features like automatic variable escaping to prevent XSS vulnerabilities. But does this actually significantly reduce the amount of code needed to write some common scenarios, or make it easier to read/manage the code?
His two things revolve some bits of more advanced functionality - automatic table display (given whatever data) and automatic filtering of the data to make of less hassle on the developer/template designer. He even mentions an interesting idea of putting callbacks or validation checks into the actual XML definition tags for forms.