Sometimes I like to blow threw a workout, not really resting more than 20 seconds. Sometimes I want to really put up some heavy numbers on my lifts so I go for like 2 minutes in between sets. I do think its important to switch it up from time to time because just like high reps vs. high weights you need to keep your muscles guessing.
For a long time I used to just stick to 1 minute rest periods, I found that I was unable to keep up with friends with shorter rest periods. During a workout all there lifts would go up in weight, while mine would really begin to fall after a few sets. Cardio helps a little bit with this, but unless your swimming, its hard to get endurance for upper body.- I think thats what your achieving with smaller rest periods.