I wouldn't put the insert of the console on a patch bay unless that is how you are routing the channels to the recording machine to record.
If you run the channel inserts to the patchbay, you are running the audio through a lot more cable all the time (the TRS Insert connection is Normalled if nothing is plugged into it. Once you plug something into, the audio after the preamp, but before the eq is sent to the Tip of that connector, and any audio coming back to the console is on the Ring of the connector). Basically, once you plug in the insert cable, your audio will always run through that cable, whether you are using an outboard device or not.
Your best sounding signal will also be the shortest wire route, and the least connectors inline of the signal. It is actually best to avoid the channel insert for another reason. It is a unbalanced signal. The combination of the long wire route, and the unbalanced wire can really start to add a lot of potential noise, and overall degration of the signal.
Again, if you are using the old method of using the channel inserts as a send to the recording machine, then you have to go this route, even though it isn't the best method. But, if you have direct out's and line in's on your mixer, and that these in's and out's are balanced, it makes more sense to have the direct out's half normalled via a patch bay to the recording machines in's, and have the recording machines out's half normalled to the Line In, or Direct In per channel of the mixing board. If you want to "insert" a compressor to that "channel" you can do so will recording, or while playing back. Also, you could have a compressor just for playback monitoring that isn't inline while tracking! It is a much more versatile setup, as well as having much better integrity.
If you don't plan on repatching your aux sends and returns, you probably could direct wire them and skip the patch bay. But, I can think of a lot of reasons you should have them on the patchbay too. First, if say a band walked in with their own effects processor that you wanted to use, you can just plug it right in to the patch bay. Also, you might want to have the input of a reverb have a compressor before it. Maybe a noise gate! Maybe you might want to use the Aux Send with one of the newer headphone amps that have Aux inputs on it, so that you can send a stereo headphone mix, but also have an individual track that can be controlled in the musicians mix.
Farview, you said "All the bay is doing is putting all the ins and outs of all your gear in one place". That is ONE function of the patchbay. It is also a way to make the "normal" connection between those peices! While you probably already know that, for people that are not knowledgable about complicated patchbay setups, they need to know that a patchbay can not only provide a central spot to connect in's and out's, but can also provide a connection between those in's and out's with some perks! Via a patchbay you can also split a signal as well as route almost any signal from one place to another.
In this world of software mixing and small consoles just for monitoring, complicated patchbay setups are going by the way side. But if you are still using an analog console, and outboard gear, it is to your advantage to have as many of the in's and out's in your studio happen on the patchbays as possible. As jake-owa stated ealier, it will help facilitate a more creative and smooth functioning work environment. You can concentrate on getting stuff done, rather than on getting behind your gear rack and repatching crap when you want to try something different.
Having your audio ALWAYS running down unbalanced lines isn't something deoxit will fix!