I can't speak to python's particular implementation of lambda, but in general lambda functions are really handy. They're a core technique (maybe even THE technique) of functional programming, and they're also very useuful in object-oriented programs. For certain types of problems, they're the best solution, so certainly shouldn't be forgotten!
I suggest you read up on closures and the map function (that links to python docs, but it exists in nearly every language that supports functional constructs) to see why it's useful.
