Um, hash is used to sign data, not encrypt it, I thought. The problem here will not be data security, but authenticity, which is probably almost as bad. Did I miss something?
Pretty much on-target. Hashes are used mainly to verify that a given message has not been tampered with. This can be extremely useful in situations where the data doesn't need to be encrypted, but you would like to be able to verify that what you got was what was sent. Also, a hash like SHA-X is an excellent way of distilling this authenticity into a very small space. No matter how long the message, the hash is X-number of bytes.
I use hashes frequently to verify that an ISO image of a CD I'm preparing to burn. For instance, the MD5 hash of the Knoppix Version 3.6 (english) CD is "5bc8e9fee2a8be0b7180fcf3e49b5386". I have a program that can compute the hash for me, and I can verify the hash it listed with the hash Knoppix.org provides for the ISO. So, it doesn't matter where the mirror of the site is. I can download the file from B0Bz5uPerWarz.com if I want to, and know they haven't done anything bad to the image, like load a trojan into an ISO they created while trying to pass it off as the legitimate thing. If the hashes of my file, and the official site are identical, I can cut the disk without near as much worry of creating Yet Another Coaster.
You're probably aware of all of the above. I'm just typing for those unfamilar with why JoeBob might care about whether or not hashes are as safe as believed.