The main reason to copy a string is to "trim the baggage", that is to trim the underlying char array to only what is necessary.
The underlying char array can mainly be too big because when you create a string by calling substring, the char array can be shared between the new string instance and the source string instance; an offset points to the first character and the length is included.
The expression I use, "trim the baggage", is taken from the source code of String copying constructor :
164 public String(String original) {
165 int size = original.count;
166 char[] originalValue = original.value;
167 char[] v;
168 if (originalValue.length > size) {
169 // The array representing the String is bigger than the new
170 // String itself. Perhaps this constructor is being called
171 // in order to trim the baggage, so make a copy of the array.
172 int off = original.offset;
173 v = Arrays.copyOfRange(originalValue, off, off+size);
174 } else {
175 // The array representing the String is the same
176 // size as the String, so no point in making a copy.
177 v = originalValue;
178 }
179 this.offset = 0;
180 this.count = size;
181 this.value = v;
This is something many developers forget and is important because a small string may prevent the garbaging of a bigger char array. See this related question where I already pointed this : Java not garbage collecting memory. Many developers consider than the decision of Java designers to use this old optimization trick that was familiar to C coders did, in fact, more harm than good. Many of us know it because we were bitten by it and did have to look into Sun's source code to understand what happened...
As Marko points out (see comments below), in OpenJDK, starting from java 7 Update 6, substring doesn't share the char array anymore and the String(String) constructor is, thus, useless. But it's still fast (even faster in fact) and as this change hadn't been propagated to all VM (and probably not all your customers) I'd recommend to keep this best-practice to use new String(substring) when the old behavior was justifying it.
