Points are more flexible. As mentioned if a reservation is canceled or modified to take advantage of lower fares, the points immediately go back into your account.
Also, unlike Travel Funds, points can be used/reused to book flights for anyone - not just the original traveler.
That said, it is usually not cost effective to purchase points. Even when SW has a 40% sale on buying points, you're going to spend more money for them than it would cost to just pay cash for the flight.
So there's a trade off: cost vs flexibility.
Steve