heres what i got off of this
http://www.aqua-fish.net/show.php?h=aquariumsubstrate
"it serves as a decorative touch for the pleasure of those who view the aquarium. It gives the aquarium a finished look. However, one of the most important roles is that it keeps the fish healthy. Aquarium substrate allows the fish to be oriented in the water, knowing top and bottom. Fish can become irritated by a clear bottomed aquarium, because of reflections and increased light sources.
A key role for aquarium substrate is that it provides a haven for the beneficial bacteria which help to make up a healthy environment for your fish. The type of substrate you should use varies with the type of aquarium that you have.
Some aquariums are meant for fish only, and in these instances the aquarium substrate should be no more than two inches deep. The substrate may be of any size unless you have fish that are bottom feeders, where you should consider using finer gravel."
an example would be that cory catfish need sand because they like to burrow they're noses through it looking for food