Here's a good article explaining the physiology behind the benefits of intervals in a training program:
Mitochondria: The Aerobic Engines
In review, here are the key points:
1) You need to do intervals to improve your endurance performance.
2) An "interval" is a level of aerobic exertion that stresses the aerobic production system by exceeding your VO2max (or 95% of one’s 20 minute maximal power (20MP)
3) You need to apply this stress regularly - several times a week. Is three times a week better? That is less clear and 2x a week is a compromise allowing a balance of recovery and long distance rides in an overall structured program.
4) Stressing the aerobic engine not only increases the ATP producing energy engines (mitochondria) but also stimulates the growth of additional capillaries (angiogenesis) to supply oxygen to the muscle cells (and mitochondria within them).
5) Although long slow distance rides will not stimulate an increase in aerobic capacity as effectively as intervals, regular rides of event distance length are needed to stimulate non energy required adaptations (ligaments, connective tissue strength, etc.)
For more information, see the CPTips article here: http://cptips.com/intervl.htm