Mulch looks aesthetically better than grass growing around a tree, and as JeffL mentioned it's a good soil conditioner since it reduces compaction and adds organic matter to the soil as it breaks down. Mulch, however, isn't always applicable in every situation.
I planted a bunch of hybrid poplars in a straight row across the side of my property, I mulched them the first year but have allowed the grass to grow into some of them. I just allow the grass to get long around the trunks, sometimes I pull the grass by hand from around the trunk if it bothers me. NEVER use a weedwhacker to cut down grass any closer than 3-4" from the trunk, depending on the steadiness and precision of your hands. All of my hybrid poplars are growing at about the same rate (4-6' per year, with 2-3" expansion in trunk diameter per season). The mulched hybrid poplars aren't doing any better than the ones that are not mulched. Then again, hybrid poplars aren't very picky about their environment and they have some of the most aggressive and invasive root systems of any tree.
The opposite is true for my River Birch, it LOVES mulch, I expanded the mulch area big-time this year because the tree has grown so quickly, and it really made a difference with growth this year. My River Birch is healthier than ever and the mulch bed around that tree looks nice as well. The wife put some flowering baskets around the mulch area to create a garden look and it turned out great.