Krillen does suck compared to the 'big boys' of DBZ, but he is a pivotal character nonetheless. Apart from providing much of the comic relief DBZ indulges in, his suffering often induces other characters to attain higher levels of power:
1) Getting the crap kicked out of him makes Gohan angry and causes him to 'rage' (helps them against Garlic and several other foes)
2) Getting killed by Frieza sent Goku over the edge and allowed him to go SSJ for the first time!
In fairness to Krillen, coward though he is at times, he does make a fair go against some of the more powerful enemies. He was involved in the fight against Frieza (cut his tail off remember?), launched his disc against Perfect Cell, and took a couple of swipes at Super Buu. Can't say I'd do anything like that; I'd probably be one of those hapless, random animal people who gets killed by the main baddy of the saga as he rampages through the cities.
As for why they included him in the game, he is a familar character from the show with a wide variety of attacks. I don't mind Krillen being in it, but I'd rather have Tien instead.