How to select thermostat for an engine?

Is there a benefit to running a hotter engine?  If I took the 180 degree t-stat out of my Chevy and put in a 195, would I get more power and better fuel economy?  There must be a benefit otherwise why would they offer hotter thermostats?  Why wouldn't every one just go with a cooler temp and run smaller radiators and save money?

I noticed on my '97 chevy suburban the water temp was rock solid at 210.  My Chevy 350 in my old pontiac - a 330 hp crate engine is running a 180 in it.  I do this because a 195 let's the engine get past 210 on 95 degree days.  But I'm wondering if the car would idle and run better if I maintained 195- 200 degrees all the time.  Maybe it would be worth it to upgrade the cooling system and set the engine with a 195 t-stat.  Maybe the car would not smell when it idles, maybe the car would get better fuel economy and have more power.  What do you think?