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This blog entry has some relevant information:

The L$ is often referred to as a virtual currency.  In fact, it is not a currency at all.  It is a micropayment token system. I have been around micropayment systems for many years in their application to mobile phone carriers. The Economist (Feb. 17, 2007) features a cover story that includes discussions about micropayments vis-à-vis digital cash. 

Most justifications for why Linden Research had to create the L$ center around micropayment issues. In reality, telecoms, Apple iTunes, Microsoft, and others have proven that floating an independent currency is not requisite to enabling a functional micropayment system. I
myself am partial to the iTunes batch-billing approach, keeping payments denominated in real currencies.

Even the more prepaid-credit approaches taken by Microsoft in the Xbox Live Marketplace avoid the complications of currency management introduced by independent, pseudo
currencies like the L$...