This is a generally a performance optimization, see the following links for more information:
http://www.sqlservercentral.com/articles/sp_prepexec/76511/
http://msdn.microsoft.com/en-us/library/ff848812.aspx
http://jtds.sourceforge.net/apiCursors.html
Paul White
SQLPerformance.com
SQLkiwi blog
@SQL_Kiwi