Lionel didn't have Magne-traction... at least until 1950. Many high-quality trains were made from 1938-1949 and run just fine without it. It's a gimmick that American Flyer couldn't easily match, and it helped sell toys to kids. It might help a little to keep locos hold the curves at insane speeds. And as GRJ said, it's great for finding screws and metallic debris that fall near the track.
How steep are your grades? How big is your layout, and how many cars are you trying to pull? MPC and newer cars roll freely. If you're using postwar cars, first consider MPC, and then have you tried oiling the axles? Most of us would be better off without rubber tires OR Magne-traction. If your layout is really that big, maybe you could adopt me!?
Sparky I'm not advocating that you should remove the tire from a grooved wheel. If you're an expert machinist or train repair person, you might be able to replace the grooved wheel with a smooth one. Unfortunately I'm neither, and except for a few locos like the original poster's Hudson, the manufacturers don't give us a choice. 
Oh that's right... in HO scale MTH does include two wheelsets in the box. But us O-gaugers don't know better, and will buy the product anyway!
