If we remember our past lifes' mistakes then there are less chances of making that mistake again, at our good times we can understand it as result of our past good deeds/punyam and at bad times we understand the mistakes done by us. By this we can easily understand the concept of karma in our lives and through self realization & evaluation there are more chances for us to get free from the cycle of birth & death.
What is the reason behind our memory loss? I heard dog will remember its past life and will cry when it sits on ash heap but forgets once its out of it! Is it true?