**I think they do. Big time.
1. Dream sequences are the third cheapest filler bested only by
a. excessive banter that does nothing to the story
b. gratuitous sex that does nothing to the story
2. Nightmare in Elm Street is different. It's all about dream sequences, revolves around a dream killer, and that's a very perfect excuse
3. Dream sequences mislead. Nothing sucks better than when a scene that supposedly kills off the dipshit main character. It then fades into a continuing scene where the same dipshit main character wakes up with a terrible fit of bad acting. And lives for some twenty minutes more. During which he makes us suffer with terrible fits of bad acting.
4. Dream sequences are usually more fun than the real thing because they make us believe, for a brief instant, that some stupid supporting actor dies in a very cleverly engineered kill sequence. But they don't, and we suffer the same unimportant bad acting for another 20 minutes only to have them die dumb. Dream sequences are the ultimate kill joy in that respect.
5. The only thing that sucks a bigger dick than dream sequences are dream sequences within dream sequences. It's all of the above multiplied by the nth power of the actual value of pi. Which is totally nonterminating suckiness if you ask me.