sorry this is really a newbie question but why would I need more than 1 usable IP? Can't I just put all the websites on the same IP?

Other uses for IP's:
If you run your own nameservers
SSL sites
You may want to give a website it's own IP for one reason or another.

In the past they used to offer a lot less IP addresses and then you got almost a riot here asking for more free IPs and SM gave in and offered more.

thanks, you answered it

but on a related note, i thought i read somewhere that SM offers their customers to use their nameservers?

Yes they do. The thing is that different people use their servers for different purposes.

Some runs web hosting businesses themselves and do not want their customers to know that they are resting a server here for whatever reasons and thus to maintain some form of anonymity the opt to host their own DNS servers which would reflect their domain name instead of that from Servermatrix or thePlanet.

Others may want more control over how their DNS works and thus opt to do the same.

For me, the primary reason is that I am hosting my client's SSL sites and thus that require static and unshared IP addresses.

You can use servermatrix' nameservers if you want, but some people (mostly people who will be using their servers for a hosting business) prefer to have their own nameservers (ns1.theirdomain.tld etc) to give out to their customers rather than giving them servermatrix' nameservers which may not looks as professional to the end customer.

Edit: Eddy beat me

thanks for the fast replies, you really answered my questions