As we know the NCAA doesn't organize these games, they just sanction them. They are put on by the cities that host them. So, Mobile, El Paso, Boise, etc. look at these as money making opportunities. They want fans to come to town to stay in their hotels, eat in their restaurants and spend money during their little vacations to their towns.
The NCAA looks at this and says "You want to pay us to allow us to allow our member schools to play another game?? Sure, here's our routing and account numbers! Thanks!" Easy money for the NCAA. And the schools are always trying to get the NCAA to earn them more money. Sign bigger TV contracts (BCS games, Basketball Tourney, etc), whatever it takes to earn more money. And while during many of the smaller bowl games the schools barely break even, if at all, due to their expenses the teams still go because their fans demand it and the players put enough of their lives into football that a little trip to a bowl game, whether some people think the games are warranted or not, is seen as a nice way to end a season. Get your school on National TV for a little exposure one more time before the season is over.
While I for one wouldn't be rooting to see the Hawkeyes in the Little Caesars Bowl I'd sure try my darndest to get to it in person or at least settle to watch it on TV if that's the last time I get to see some of my favorite Hawkeye players suit up and lay a few people out one last time.
I'll take me another college football game any day.