I am very involved in character creation for my games and it has two benifits. I know what the character does and why he does it. The first sounds simple but I have had quite a few characters created with an idea in mind that had to get recreated when it got to me for approval because it was, let's say, off target. The why, however is the main thing. Because when you know where you come from you know where your going. Finishing unresolved business, scratching that unscratchable itch, being better than anyone at what you do, or finding a way out at last. It makes runs transitory things and the characters true goals for his character clear. It gives the GM the seed for what hero, anti-hero, gladiator, truth seeker you have and to see it sprout you just add tremendous amounts of adversity to unlock it.
I consider this to be the core of gaming being on the same page about the characters and what they are about. One thing that gets lost in running the characters is the question of 'cheating'. The characters in game are not able to cheat ever. Any advantage they come up with being fair or unfair is never cheating. It is the nature of the game itself to find a ways to pull the wool over the eyes of your opponets, turn the tables on them, and put them down like dogs. The characters are rewarded hansomly for making it happen. The players are a different matter. Using outside game info, bad accounting practices of gear, money, etc, and flat out working the GM like your Reggie Miller at the Finals. This 'cheating' is what robs games. When you have issues about this crop up in your game find a systematic way to root it out and keep it on track. Sometimes you really have to bust a someones bad habits to make the game fun for everyone again. Cause if the GM ain't happy ain't no one gonna be happy.